Reissuing Treasury Stock at a Price Higher Than the Price

question 2

Multiple Choice

Reissuing treasury stock at a price higher than the price paid to acquire the stock results in a(n) :

• A)increase in contributed capital
• B)decrease in contributed capital
• C)loss reported on the income statement
• D)gain reported on the income statement

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Definitions:

Average Total Cost

The sum of all production costs (both fixed and variable) divided by the amount of produced output.

Economic Profit

The variance between a business's complete earnings and its aggregate expenses, factoring in both overt and inferred costs.

Competitive Price-searcher Markets

Markets where firms have some power to set prices due to differences in the products they offer, even though they must consider the potential entry of new competitors.

Potential New Entrants

Businesses or individuals that could potentially enter a market and compete with existing entities.