An Externality Refers to Economic Events Outside a Market

question 125

True/False

An externality refers to economic events outside a market.

---

Definitions:

Treasury Stock

Shares that were issued and later reacquired by the issuing company, reducing shareholders' equity and outstanding shares.

Cash Dividend

A payment made by a company out of its earnings to shareholders, distributing profits in the form of cash.

Journal Entries

The method by which financial transactions are recorded in an accounting system, typically involving a debit to one or more accounts and a credit to another in equal amounts.

Shares Outstanding

The total number of shares of a corporation's stock that are currently owned by all its shareholders, including share blocks held by institutional investors and restricted shares owned by the company’s officers and insiders.