When O'Rourke Corporation Sells Treasury Stock for More Than the Original

question 5

Multiple Choice

When O'Rourke Corporation sells treasury stock for more than the original cost:

• A)stockholders' equity increases.
• B)paid-in capital increases.
• C)retained earnings may increase.
• D)retained earnings may decrease.

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Definitions:

Percent Per Year

A rate or proportion of a quantity expressed as a fraction of 100 per annum.

Inflation

The speed at which the average price of goods and services increases, resulting in a reduction of money's buying power.

Purchasing Power

The value of a currency expressed in terms of the amount of goods or services that one unit of money can buy.

Lenders

Lenders are individuals or institutions that provide funds to others with the expectation that the funds will be repaid, usually with interest.