Choose the Appropriate Letter to Match the Description with the Purpose

question 11

Essay

Choose the appropriate letter to match the description with the purpose and accounting effect of the type of stock transaction.Some letters will appear in more than one column and not all letters will necessarily be used.Some blanks will require more than one letter.

A.To obtain shares to reissue to employees as part of employee stock purchase plans.
B.To increase the number of shares outstanding and decrease the per-share market price while managing a company that you expect will struggle financially in the future.
C.To reduce the number of outstanding shares to increase per-share measures of earnings.
D.To increase the number of shares outstanding and decrease the per-share market price while signaling to financial statement users that the company expects significant future earnings.
E.To obtain shares that can be reissued as payment for purchases of other companies.
F.To send a signal to investors that the company itself believes its own stock is worth acquiring.
G.Reduces stockholders' equity.
H.Changes par value per share.
I.Changes Additional Paid-in Capital account balance.
J.Reduces Retained Earnings.
K.Does not affect any of the account balances that comprise stockholders equity.

---

Definitions:

Government's Country

The nation state represented and governed by a particular government.

Expatriates

Employees who are living and working in a country other than their home country, often for a certain period.

Global Corporation

A large business enterprise that operates and has assets in more than one country, often influencing global economics and politics.

Domestic Firm

A company that operates primarily within the borders of one country and focuses on the local market.