Asked by Regan Waite on May 11, 2024
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A company purchased 1,000 shares of treasury stock for $38,000 cash.The shares were initially issued for $24,000 and had a $9,000 par value.Which of the following statements incorrectly describes the effect of the treasury stock purchase?
A) Net income is unchanged.
B) Earnings per share (EPS) increases.
C) Total assets remain the same.
D) Stockholders' equity decreases.
Treasury Stock
Shares of a company's own stock that it has reacquired from shareholders and holds in its treasury.
Earnings Per Share
A financial metric that measures the amount of net income earned per share of a company's outstanding stock.
Stockholders' Equity
The remaining interest in a company's assets once liabilities have been subtracted, signifying the ownership stake.
- Understand the idea and financial consequences of transactions involving treasury stock.
Verified Answer
Learning Objectives
- Understand the idea and financial consequences of transactions involving treasury stock.
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