To Record the Purchase of Treasury Stock

question 6

Multiple Choice

To record the purchase of treasury stock:

• A)debit Treasury Stock-Common (par value); credit Cash (same).
• B)debit Treasury Stock-Common (purchase price); credit Cash (same).
• C)debit Treasury Stock-Common (par value); debit any difference to Paid-in Capital; credit Cash (purchase price).
• D)None of these answers are correct.

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Definitions:

Closing Entries

Entries in the journal made during the closing of an accounting period to move balances from transitory accounts to enduring accounts.

Fiscal Year

A one-year period that companies and governments use for financial reporting and budgeting, different from the calendar year.

Closing Entries

Journal entries made at the end of an accounting period to transfer temporary account balances to permanent accounts to prepare the books for the next period.

Adjusting Entries

Journal entries made in accounting to update the records for expenses and revenues that have accrued but not yet been recorded.