Several Years Ago,Doran Corp

question 145

Multiple Choice

Several years ago,Doran Corp.issued 100,000 of its $2 par value stock for a total of $800,000.This is the only time that it has sold stock.This year it purchased 1,000 shares of its own stock for $10 a share.As a result of acquiring treasury stock:

• A) its stockholders' equity decreases by $10,000.
• B) it will recognize a loss of $2,000.
• C) its common stock account decreases by $10,000.
• D) its retained earnings decrease by $10,000.

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Definitions:

Financing Section

Part of a cash flow statement that gives information on cash flows related to financing activities like loans, repayments, and issuing of stocks.

Cash Flows

The total amount of money being transferred into and out of a business, typically measured during a specific period for financial analysis.

Statement of Cash Flows

A summarized record of all the cash coming into a company from operations and investment sources, and all the cash spent on business activities and investments within a certain period.

Cash Dividends

Payments made by a corporation to its shareholder members, usually derived from profits earned.