If the purchase price of retired stock exceeds the net amount removed from paid-in capital,the excess is debited to Retained Earnings.

Question

Quizplus · Accepted Answer

This is a correct statement according to the generally accepted accounting principles (GAAP). If the purchase price of retired stock exceeds the net amount removed from paid-in capital, it means that the company is paying more than the amount originally invested by the shareholders. This excess amount is considered a loss to the company and is debited to Retained Earnings, which reduces the company's equity.

If the Purchase Price of Retired Stock Exceeds the Net