Which of the Following Statements Is Correct If Treasury Stock

question 50

Multiple Choice

Which of the following statements is correct if treasury stock costing $25,000 was sold for $27,500?

• A)Total owners' equity increases $2,500.
• B)Total owners' equity increases $27,500.
• C)Net income increases $2,500.
• D)Total owners' equity increases $25,000.

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Definitions:

Treasury Stock-Common

Shares that were once outstanding and have been bought back by the issuing company, reducing the amount of available stock on the open market.

Paid-In Capital

Refers to the amount of capital "paid in" by investors during common or preferred stock issuances, including the excess over the par value.

Reissued

Refers to items or securities that are sold or distributed again after being previously issued.

Treasury Stock

Stocks that were initially released and then bought back by the company that issued them, decreasing the number of available shares in the market.