The cost method of accounting for stock

A) recognizes dividends as income
B) is only appropriate as part of a consolidation
C) requires the investment to be increased by the reported net income of the investee
D) requires the investment to be decreased by the reported net income of the investee

Cost Method

An accounting method used to value certain investments at their original purchase cost, without adjusting for market fluctuations.

Recognizes Dividends

The process by which a company records the payment of dividends to its shareholders in its financial statements.

Reported Net Income

The net income that a company reports in its financial statements, which represents the company's total earnings after expenses, taxes, and costs are subtracted from total revenue.