When Treasury Stock Is Resold for an Amount Less Than

question 114

True/False

When treasury stock is resold for an amount less than its cost,the difference between the sales price and the cost is deducted from the Additional Paid-In Capital-Treasury Stock account or the Retained Earnings account (if the Additional Paid-In Capital-Treasury Stock account does not exist).

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Definitions:

Warranties

Legally binding promises or guarantees that a product or service will meet specified criteria of quality, performance, or reliability.

Bad-Check Statute

Laws that penalize individuals who knowingly write checks from a bank account without sufficient funds.

Drawee Bank

The bank upon which a check is drawn, responsible for paying the check amount to the bearer or designated payee.

Drawer

The party who draws a draft, that is, the party who orders that the money be paid.