A Sale of Treasury Stock May Result in a Decrease

question 32

True/False

A sale of treasury stock may result in a decrease in paid-in-capital. All decreases should be charged to the Paid-In-Capital from Sale of Treasury account.

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Definitions:

Periodic Inventory System

An inventory accounting system where updates to the inventory account are made at specified intervals, not on a continuous basis.

After-Tax Income

The net income remaining after all tax obligations have been satisfied.

Periodic Inventory System

An inventory system that updates inventory records and calculates cost of goods sold at the end of a reporting period, rather than continuously.

LIFO

Last In, First Out refers to an approach for evaluating inventory in which the items that were produced last are considered to be the first ones sold.