When a Firm Uses the Par Value Method to Account

question 102

Multiple Choice

When a firm uses the par value method to account for treasury shares, ________________. The par value method requires specific identification of the date and initial proceeds of the shares repurchased, which is why firms seldom use this method.

• A)the accountant debits the Treasury Stock-Common account for the par value of the repurchased shares, debits Additional Paid-In Capital for the difference between the original issue price of the shares and par value, and plugs Retained Earnings for any difference between the repurchase price and the original issue price.
• B)the accountant debits the Common Stock account for the par value of the repurchased shares, debits Additional Paid-In Capital for the difference between the original issue price of the shares and par value, and plugs Retained Earnings for any difference between the repurchase price and the original issue price.
• C)the accountant debits the Common Stock account for the par value of the repurchased shares, credits Additional Paid-In Capital for the difference between the original issue price of the shares and par value, and plugs Retained Earnings for any difference between the repurchase price and the original issue price.
• D)the accountant debits the Retained Earnings account for the par value of the repurchased shares, credits Additional Paid-In Capital for the difference between the original issue price of the shares and par value, and plugs Common Stock account for any difference between the repurchase price and the original issue price.
• E)the accountant debits the Retained Earnings account for the par value of the repurchased shares, debits Additional Paid-In Capital for the difference between the original issue price of the shares and par value, and plugs Common Stock account for any difference between the repurchase price and the original issue price.

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Definitions:

Climate

The average weather conditions in a particular region over a long period, characterized by temperature, precipitation, and other factors.

Topography

The arrangement of the natural and artificial physical features of an area, including its elevations, valleys, and bodies of water.

Atmosphere

The layer of gases that surrounds the Earth, crucial for life as it provides oxygen, absorbs ultraviolet solar radiation, and moderates temperature.

Solar Radiation

The electromagnetic energy emitted by the sun, including visible light, ultraviolet light, and infrared energy, which is a primary source of energy for Earth's climate system.