To Record the Purchase of Treasury Stock

question 117

Multiple Choice

To record the purchase of treasury stock:

• A) debit Treasury Stock-Common (par value); credit Cash (same).
• B) debit Treasury Stock-Common (purchase price); credit Cash (same).
• C) debit Treasury Stock-Common (par value); debit any difference to Paid-in Capital; credit Cash (purchase price).
• D) None of these answers is correct.

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Definitions:

Ending Inventory

The total value of a company's inventory available at the end of an accounting period, instrumental in calculating the cost of goods sold.

Purchased Units

Units of goods or services acquired through purchase, often used to refer to inventory items bought for resale in business operations.

Perpetual Moving Average

A method in inventory management where the average cost of inventory is recalculated after each acquisition or sale, ensuring up-to-date and accurate inventory valuations.

Ending Inventory

The total value of all the inventory a company has on hand at the end of its fiscal period, computed under specific costing methods.