Final answer:
False. The use of the equity method of accounting by investors in unincorporated joint ventures does not result in off-balance-sheet financing by the investors.
Step-by-step explanation:
False. The use of the equity method of accounting by investors in unincorporated joint ventures does not result in off-balance-sheet financing by the investors. When an investor uses the equity method to account for its investment in an unincorporated joint venture, it recognizes its share of the joint venture's net income or loss on its income statement. This means that the investor's investment and its share of the joint venture's equity are included on its balance sheet, and there is no off-balance-sheet financing. For example, if Company A has a 30% ownership interest in an unincorporated joint venture and the joint venture earns a net income of $100,000, Company A would recognize $30,000 ($100,000 x 30%) as its share of the joint venture's net income on its income statement. Company A would also include its investment in the joint venture and its share of the joint venture's equity on its balance sheet.