[amp_mcq option1=”Debited to investment account” option2=”Credited to investment account” option3=”Debited to revenue account” option4=”Credited to revenue account” correct=”option2″]
The correct answer is: B. Credited to investment account
A holding company is a company that owns a controlling interest in another company. When a holding company receives dividends from its subsidiary companies, it credits the investment account. This is because the dividends represent a return on the investment that the holding company has made in the subsidiary companies.
The other options are incorrect because:
- Option A is incorrect because dividends received are not a cost of the investment.
- Option C is incorrect because dividends received are not revenue.
- Option D is incorrect because dividends received are not an expense.
I hope this helps! Let me know if you have any other questions.