Which Statement Is Correct About the "Two Transaction Method" for Treasury

question 37

Multiple Choice

Which statement is correct about the "two transaction method" for treasury shares?

• A)This method decreases the contributed surplus when the repurchased shares are later re-sold.
• B)This method has the same effect on contributed surplus to that of the two transaction method.
• C)This method treats the reacquisition and subsequent sale as once cycle for accounting.
• D)This method increases contributed surplus at the time of re-purchase.

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Definitions:

Activity-Based Costing

An accounting technique that tags and apportions the costs of organizational activities to every product and service in line with their real consumption.

Activity Rate

The predetermined rate used to allocate overhead costs to products or services based on a specific activity measure, such as machine-hours or labor-hours.

Labor-Related Activity

Activities or tasks that directly involve or are associated with the workforce's efforts in the production process or service delivery.

Traditional Costing Method

A costing method that allocates overhead costs to products based on a predetermined rate, usually associated with direct labor hours or machine hours.