Question

The method of accounting for long-term investments in equity securities that most closely fits the requirements of accrual accounting is the

Answer 1

Equity Method

Step-by-step explanation:

The reason is that the profit after tax earned during the period is added to the value of investment and the cash dividends received reduces the value of the equity investment. This is as per the guidelines of the accrual accounting which says that revenue must be recorded when they are earned and expenses must be recorded when they are incurred. Hence it is as per the guidelines of accrual accounting principles.