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:

Ending Inventory

Ending inventory refers to the total value or quantity of unsold goods that a company holds at the end of an accounting period.

Cash Disbursements

The outflow of cash for expenses or investments, typically detailed in a financial planning or accounting report.

Goods Purchased

Items bought by a company for resale or use in production, contributing to inventory.

Variable Selling Expenses

Costs that fluctuate in direct proportion to changes in sales volume, such as commissions and shipping charges.