Which of the Following Is Not True Relating to Treasury

question 82

Multiple Choice

Which of the following is not true relating to treasury stock?

• A)A firm creates treasury stock when it repurchases its own stock and does not retire it.
• B)Treasury stock lowers the stock outstanding.
• C)Treasury stock may be recorded at the cost of the stock.
• D)Treasury stock may be recorded at par or stated value.
• E)Treasury stock is,in essence,an increase in paid-in capital.

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Definitions:

Net Operating Income

A business's income after deducting operating costs, not including taxes or interest.

Break-even Points

The level of sales at which total revenues equal total costs, resulting in no profit or loss.

Break-even Sales

Break-even sales represent the amount of revenue needed to cover all fixed and variable costs, indicating the point at which a business neither makes a profit nor incurs a loss.

Break-even Sales

The level of sales at which a business generates revenue exactly equal to its costs, resulting in no profit or loss.