A Corporation Purchases 10,000 Shares of Its Own $10 Par

question 157

Multiple Choice

A corporation purchases 10,000 shares of its own $10 par common stock for $35 per share, recording it at cost. What will be the effect on total stockholders' equity?

• A) increase, $100,000
• B) increase, $350,000
• C) decrease, $100,000
• D) decrease, $350,000

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Definitions:

Free Goods

Free goods are resources or services that are available in abundance and do not have an opportunity cost, meaning they can be consumed in unlimited quantities without depleting any resource.

Government Intervention

Actions taken by a government to affect the economy, which can include regulations, subsidies, taxes, and direct provision of goods or services.

Rival in Consumption

A good is termed a rival in consumption if its use or consumption by one individual prevents its use or consumption by another individual.

Excludable

A characteristic of a good or service that allows owners to prevent its use by people who have not paid for it.