Which of the Following Typically Would NOT Be Paid for Using

question 21

Multiple Choice

Which of the following typically would NOT be paid for using working capital?

• A) Purchase of new facilities
• B) What it costs to store inventory
• C) What a firm owes suppliers
• D) Employee salaries
• E) Marketing research costs

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Definitions:

Treasury Stock

Treasury stock consists of shares that were issued and later reacquired by the company. These shares do not pay dividends and do not have voting rights.

Par Common Stock

The nominal or face value of a share of common stock as stated in the corporate charter, which has no direct relation to the market value.

Fair Market Price

This term refers to the price at which an asset would change hands between a willing buyer and a willing seller, neither being under any compulsion to buy or sell and both having reasonable knowledge of relevant facts.

Treasury Stock

Shares that were once part of the floating stock of a company but were then repurchased and are held by the company itself.