A Company Sells Treasury Stock for an Amount Less Than

question 51

Multiple Choice

A company sells treasury stock for an amount less than its acquisition cost. If the company prepares the statement of cash flows using the indirect method or the direct method, where would this transaction appear?

• A)The sale of treasury stock would be presented in the investing activities section as a cash receipt under both methods.
• B)The sale of treasury stock would be presented in the non-cash investing and financing activities section under both methods.
• C)The sale of treasury stock would be presented in the operating activities section as a reduction in net income under the indirect method and as a cash receipt under the direct method.
• D)The sale of treasury stock would be presented in the financing activities section as a cash receipt under both methods.

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Definitions:

Syllogism

An approach to infer a conclusion based on two assumed or specified propositions.

Extended Argument

A complex, detailed argument involving multiple steps, premises, and conclusion designed to persuade or inform.

Syllogistic Step

A part of syllogistic reasoning, where a conclusion is drawn from two given or assumed propositions (premises).

Proposition

A declaration that presents a judgment or opinion perspective.