When Treasury Stock Is Resold for an Amount Less Than

question 114

True/False

When treasury stock is resold for an amount less than its cost,the difference between the sales price and the cost is deducted from the Additional Paid-In Capital-Treasury Stock account or the Retained Earnings account (if the Additional Paid-In Capital-Treasury Stock account does not exist).

---

Definitions:

Lost Profits

Financial gains that could have been earned but were not due to a breach of contract or other wrongful act.

Consequential Damages

Compensation for losses not directly caused by a breach of contract but resulting as a foreseeable consequence of the breach.

Breach of Warranty

The failure to fulfill the terms of a promise or guarantee made about the quality or functionality of a product or service.

40,000 Mile Warranty

A guarantee provided, typically by a vehicle manufacturer, covering repairs and certain maintenance for up to 40,000 miles of vehicle use.