1.A corporation may purchase treasury stock for all of the following reasons except: a. to support the market price of the stock
b. to issue to employees in stock option plans
c. to prevent a hostile takeover.
d. to generate more capital from the same stock.
e. no exception, for all of the reasons stated.
2.If the corporation repurchases treasury stock a. total assets of the corporation increase
b. paid-in-capital increases but total stockholder equity remains the same
c. total stockholder equity decreases
d. paid-in-capital decreases but total stockholder equity remains the same
e. total liabilities of the corporation decrease
3.Additional paid-in-capital from treasury stock is recorded: a. when treasury stock is purchased for less than the amount of its original issue.
b. when treasury stock is reissued for more than the amount at which it was purchased.
c. when treasury stock is reissued for an amount greater that the amount at which it was originally issued.
d. only when the treasury stock is issued to employees.
4.Treasury stock which is repurchased by the corporation for $100 per share is later reissued for $105 per share. The effect of the reissuance will a. decrease the paid-in-capital portion of stockholder
b. decrease retained earnings
c. increase a revenue account from the sale
d. increase retained earnings
e. increase the paid-in-capital portion of stockholder equity
5.Support Corporation, which has issued 3,000,000 shares of common stock, entered into several treasury stock transactions:
1- repurchased 90,000 shares at $14 per share.
2- reissued 20,000 shares of the treasury stock at $15 per share.
Show the balance, and describe how the treasury stock account will be presented on the December 31 balance sheet. a. $960,000, it is added in the stockholder equity section.
b. $980,000, it is deducted from the stockholder equity section.
c. $980,000, it is added in the stockholder equity section.
d. $960,000, it is deducted from the stockholder equity section.
e. $1,260,000, it is deducted from the stockholder equity section..
6.Which of the following transactions will increase a shareholder's ownership interest in a corporation? a. a stock dividend
b. a cash dividend
c. the corporation issues stock to new investors
d. the corporation repurchases treasury stock
e. a stock split
7.Red and Green each own common stock in the Blue company. If Red sells her stock directly to Green, which of the following statements is true? a. Blue's contributed capital increases
b. Blue's contributed capital decreases
c. Blue's contributed capital remains the same
d. Blue's cash account increases
e. Blue's cash account decreases
8.Which of the following is a FALSE statement? a. common stock can be issued at a price greater than its par value
b. treasury stock can be sold at a price less than its cost
c. the claims of stockholders are honored before those of creditors
d. retained earnings is profit reinvested in a corporation