Under the Cost Method of Accounting for Treasury Stock Transactions

question 127

Multiple Choice

Under the cost method of accounting for treasury stock transactions, when the proceeds from a sale are greater than the cost, the excess over cost is treated as an)

• A) increase in Other Expenses from Treasury Stock Sales.
• B) increase in Additional Paid-in Capital from Treasury Stock.
• C) increase in a contra-shareholders' equity account.
• D) None of these choices.

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Definitions:

Bankruptcy

A legal procedure for dealing with debt problems of individuals and businesses; officially declared inability to pay outstanding debts.

Promissory Estoppel

A legal principle that prevents a promisor from denying a promise when the promisee relies on it to their detriment.

Consideration

A fundamental concept in contract law that refers to something of value (such as money, a promise, or an act) exchanged between parties as part of a contract.

Bargained-For Exchange

A mutual agreement between parties in which each promises to give something in exchange for a benefit.