A Company Should Recognize a Gain on Treasury Stock

question 40

Multiple Choice

A company should recognize a gain on treasury stock:

• A)when treasury stock is purchased for less than the par value of the stock.
• B)when treasury stock is sold for more than the par value of the stock.
• C)when treasury stock is sold for less than the par value of the stock.
• D)in none of the above situations. No gain is recognized on treasury stock transactions.

Evaluate how changes in income affect consumer budget and choices.

Identify optimal consumption points using indifference curves and budget lines.

Examine the demand function for different goods based on utility maximization.

Distinguish between inferior and normal goods within a utility framework.

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Definitions:

Clearing

The process of reconciling purchases and sales of various options, futures, or securities, and the direct transfer of funds from one financial institution to another.

Net Float

The difference between checks written against and deposited in an account, before those checks have been cleared and settled.

Money Market Securities

are short-term financial instruments, such as treasury bills and commercial paper, that provide liquidity and relatively low risk.

Average Daily Receipts

The average amount of cash received by a business on a daily basis, calculated over a specific period of time.