If a Company Purchases Treasury Stock for $10,000 and Then

question 20

Multiple Choice

If a company purchases treasury stock for $10,000 and then reissues it for $3,000,the difference of $7,000 is

• A)treated as a gain on the sale.
• B)treated as a loss on the sale.
• C)an increase in stockholders' equity.
• D)a decrease in stockholders' equity.

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Definitions:

Gross Wages

Gross wages are the total earnings of an employee before any deductions like taxes, retirement contributions, and health insurance premiums are made.

Form 4070

A form used by employees to report their tips to their employer.

FICA Withholding

The process of deducting Social Security and Medicare taxes from employees' paychecks, as mandated by the Federal Insurance Contributions Act.

Federal Income Tax

The annual income of individuals, corporations, trusts, and other legal entities is subject to a tax imposed by the IRS.