When Treasury Stock Is Purchased for an Amount Greater Than

question 110

Multiple Choice

When treasury stock is purchased for an amount greater than its par value,what is the effect on total shareholders' equity?

• A)Increase.
• B)Decrease.
• C)No effect.
• D)Cannot tell from the given information.

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Definitions:

Economic Value

The worth of a good or service determined by its ability to satisfy needs or wants; measured by the maximum amount a consumer is willing to pay.

Interest Rate

The proportion of a total amount of money that is required as payment for borrowing it, usually described as a yearly percentage rate.

Equivalent

Something that is equal in value, function, amount, or meaning to something else.

Invested

Refers to the allocation of resources, often money, in expectation of generating an income or profit.