Under the par value method, the balance in the Treasury Stock account for a company's common stock is equal to the average amount of paid in capital of the company's outstanding shares O reported as a reduction of the balance of the common stock account O reported as a reduction of total stockholders' equity O equal to the cost to reacquire the treasury shares.

Under the par value method, the balance in the Treasury Stock account for a company's common stock is equal to the average amount of paid in capital of the company's outstanding shares O reported as a reduction of the balance of the common stock account O reported as a reduction of total stockholders' equity O equal to the cost to reacquire the treasury shares.

Cornerstones of Financial Accounting

4th Edition

ISBN:9781337690881

Author:Jay Rich, Jeff Jones

Publisher:Jay Rich, Jeff Jones

Chapter10: Stockholder's Equity

Section: Chapter Questions

Problem 12MCQ

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What amount of the proceeds from the issuance of no-par, no-stated-value stock is recorded in the Capital Stock account?
Which of the following is true of a stock dividend? A. It is a liability. B. The decision to issue a stock dividend resides with shareholders. C. It does not affect total equity but transfers amounts between equity components. D. It creates a cash reserve for shareholders.
The following information has been gathered for Malette Manufacturing: Assume that the firm has no common stock equivalents. The tax rate is 34%. Required: 1. Compute the return on assets. 2. Compute the return on common stockholders equity. 3. Compute the earnings per share. 4. Compute the price-earnings ratio. 5. Compute the dividend yield. 6. Compute the dividend payout ratio.
The entry to record the issuance of common stock at a price above its par value includes a A) an increase to cash. B) an increase to a liability account for the difference between the price paid by the stockholders and the par value of stock. C) an increase to additional paid-in capital: common stock D) a decrease to common stock
When non-par value shares are reacquired at a cost greater than their average issue price and cancelled, what account(s) should be debited? Select one: a. The share account for the total cost. b. The share account for the average issue price, contributed surplus-repurchases up to its account balance, other contributed surplus relating to this class of shares in proportion to the number of shares repurchased versus outstanding and lastly retained earnings for any remaining amount. c. The share account for the average per share amount, retained earnings for the additional amount, and lastly contributed surplus for any remaining amount. d. The share account for the average per share amount and a loss account for the additional amount. e. none of the above answers are correct.
If a company resells treasury stock at a loss, and that amount exceeds any balance in the treasury stock APIC account, the remaining loss is debited to: Group of answer choices Additional Paid in Capital (APIC) -Common Stock Treasury stock cannot be sold at a loss Retained earnings Loss on sale of treasury stock
Which of the following statements is incorrect? Issued shares of stocks include those that have been at one time been sold to the public and which have been subsequently retired. If an entity’s capital stock is retired, the Share Capital account is reduced by its par value, the number of shares is reduced by the stock retired and the treasury stock is credited at cost. Treasury shares may be reissued as dividends, in which case the cost of the shares should be charged to Retained Earnings. Though may be used in computing for the Share Capital, stated value is not similar to par value of stock.
Under IFRS, a purchase by a company of its own shares results in: a. an increase in treasury shares. b. a decrease in assets. c. a decrease in equity. d. All of the above.
When a corporation has outstanding both common and pre-ferred stock: a. Basic and diluted earnings per share are reported onlyif the preferred stock is cumulative.b. Earnings per share is reported for each type of stockoutstanding.c. Earnings per share is computed without regard to theamount of the annual preferred dividends.d. Earnings per share is computed without regard to theamount of dividends declared on common stock.
When a company buys shares of its own stock to be held in treasury, it records a reduction in: B . both assets and shareholders’ equity.
When a company buys shares of its own stock to be held in treasury, it records a reduction in: C . assets and an increase in shareholders’ equity.
When treasury stock is purchased for more than the par value of the stock and the cost method is used to account for treasury stock, what account(s) should be debited?Required to answer. Single choice. a. Treasury stock for the par value and retained earnings for the excess of the purchase price over the par value b. Treasury stock for the purchase price c. Treasury stock for the par value and paid-in capital in excess of par for the excess of the purchase price over the par value d. Paid-in capital in excess of par for the purchase price