What entry is made to recognize cash received from an associate?

When cash is received from an associate, it typically represents a distribution of profits or dividends that have been declared by the associate. In this context, recognizing the cash received involves crediting the "Dividend Received" account.

The principle behind this entry is that when an associate declares a dividend, it effectively reduces the retained earnings of that associate, but it generates cash inflow for the investor. This forms part of the investor's income for the period and needs to be recognized accordingly.

By crediting the Dividend Received account, the cash inflow is correctly reflected in the income statement, which increases the overall profit recognized by the investor from its investment in the associate. This helps ensure the financial statements provide an accurate picture of the investor’s income and cash flow.

Other options are not appropriate in this context as they do not reflect the receipt of cash directly. "Share of profit in associate" relates to the recognition of equity earnings, rather than cash received. "B/f inv in Associate" and "C/f Inv in associate" refer to the carrying value of the investment, which does not change when cash is received. These entries do not capture the income recognition that occurs when dividends are declared and received.