Which One of the Following Statements Is Not True

question 14

Multiple Choice

Which one of the following statements is not true?

• A) Treasury stock transactions do not result in gains or losses on the income statement.
• B) The treasury stock account is treated as a contro-stockholders' equity account
• C) The total amount of stockholders' equity is unaffected by the method used to account for treasury stock.
• D) Treasury stock transactions may result in an increase to retained earnings.

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Definitions:

Actual Capital Markets

Refers to live, operational markets where securities, debts, and equities are traded and capital is allocated in real time.

Market Efficiency

A theory stating that all available information is already reflected in asset prices, thus making it impossible to consistently achieve higher returns.

Capital Markets

Markets where individuals and institutions trade financial securities, such as stocks and bonds, facilitating the raising of capital for long-term investments.