Which of the Following Will Decrease the Balance in Retained

question 152

Multiple Choice

Which of the following will decrease the balance in Retained earnings?

• A) Repayment of bond principal
• B) Stock split
• C) Stock dividend
• D) Purchase of treasury stock

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Definitions:

Excess Reserves

Funds that banks hold over and above the required minimum by the central bank to cover depositor withdrawals.

Open Market Operations

Actions undertaken by a central bank, such as buying or selling government securities, to control the money supply and interest rates.

Federal Reserve District Banks

The 12 regional banks that make up the Federal Reserve System of the United States, each serving a specific geographic area.

Securities

Financial instruments that represent an ownership position in publicly-traded corporations (stocks), a creditor relationship with a governmental body or a corporation (bonds), or rights to ownership as represented by an option.