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.

Question

Quizplus · Accepted Answer

The purchase of treasury stock for $38,000 cash reduces total assets by the same amount, as cash is an asset and its outflow decreases the total assets.

A Company Purchased 1,000 Shares of Treasury Stock for $38,000