Which of the Following Is Not True Relating to Treasury

question 82

Multiple Choice

Which of the following is not true relating to treasury stock?

• A)A firm creates treasury stock when it repurchases its own stock and does not retire it.
• B)Treasury stock lowers the stock outstanding.
• C)Treasury stock may be recorded at the cost of the stock.
• D)Treasury stock may be recorded at par or stated value.
• E)Treasury stock is,in essence,an increase in paid-in capital.

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Definitions:

Purchase Order

A formal document sent from a buyer to a supplier to authorize the purchase of products or services under specified terms and conditions.

Subsidiary Ledger

A detailed ledger that contains the individual accounts needed to support a specific general ledger account.

Accounts Payable

Liabilities of a business that are obligations to pay creditors for goods and services purchased on credit.

Trial Balance

A bookkeeping worksheet in which the balances of all ledgers are compiled into debit and credit account column totals that are equal.