Reasons that a company would purchase treasury stock include all of the following EXCEPT:
A. management wants to avoid a takeover by an outside party.
B. it needs the stock for distribution to employees under stock purchase plans.
C. it wants to increase net assets by buying its stock low and reselling it at a higher price.
D. management wants to decrease earnings per share of common stock.
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Amber Corporation purchases 40,000 shares of its own $10 par value common stock for $30 per share. What will be the effect on stockholders' equity?
A. Increase $400,000
B. Increase $1,200,000
C. Decrease $400,000
Decrease $1,200,000
Treasury stock has a:
A. debit balance, the opposite of other stockholders' equity accounts.
B. credit balance, the same as other stockholders' equity accounts.
C. credit balance, the opposite of other stockholders' equity accounts.
D. debit balance, the same as other stockholders' equity accounts.
Bloom Corporation issued 20,000 shares of common stock. Bloom purchased 2,000 shares and later reissued 1,000 shares. How many shares are issued and outstanding?
A. 18,000 issued and 18,000 outstanding
B. 20,000 issued and 18,000 outstanding
C. 19,000 issued and 19,000 outstanding
D. 20,000 issued and 19,000 outstanding
How does the declaration of a cash dividend affect the accounting equation?
A. increase to Liabilities and a decrease to Stockholders' Equity.
B. increase to Liabilities and a decrease to Assets.
C. increase to Assets and a decrease to Liabilities.
D. increase to Stockholders' Equity and a decrease to Assets.
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