A Company Sells Treasury Stock for an Amount Less Than

question 29

Multiple Choice

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

• A)The sale of treasury stock would be presented in the investing activities section as a cash receipt under the both methods.
• B)The sale of treasury stock would be presented in the financing activities section as a cash receipt under the 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 non-cash investing and financing activities section under both methods.

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Definitions:

Precisionism

An artistic movement characterized by the depiction of industrial and urban landscapes with sharp, geometric forms and an emphasis on accuracy.

Cubism

An early 20th-century avant-garde art movement pioneered by Pablo Picasso and Georges Braque, characterized by the fragmentation of objects into geometric forms and multiple perspectives.

Jacob Lawrence

An American painter known for his portrayal of African-American historical subjects and contemporary life.

Migration of the Negro

A series of paintings by artist Jacob Lawrence detailing the migration of African Americans from the rural South to the urban North in the early 20th century.