What Would Be the Impact on the Accounting Equation When

question 128

Multiple Choice

What would be the impact on the accounting equation when a company purchases treasury stock?

• A)Increase assets and increase stockholders' equity.
• B)Decrease assets and increase stockholders' equity.
• C)Decrease assets and decrease stockholders' equity.
• D)No effect on the accounting equation.

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Definitions:

Useful Life

The estimated period over which an asset is expected to be usable by the owner.

Straight-Line Method

A depreciation method where an asset's cost is evenly spread across its useful life, resulting in equal depreciation expenses each period.

Accumulated Depreciation

This represents the total amount of depreciation expense that has been charged against a fixed asset since it was put into use.

Salvage Value

The approximate salvage worth of an asset at its lifespan's conclusion.