If a corporation appropriates retained earnings for treasury stock transactions, the appropriation will affect total amounts for retained earnings and stockholders' equity as $\begin{array}{lll}
&\text { Total } & \text { Total } \
&\text { Retained Earnings } & \text { Stockholders' Equity } \
\text { I. } & \text { decrease} & \text { decrease } \
\text { II. } & \text { decrease } & \text { no effect }\
\text { III. } &\text { no effect }& \text { no effect} \
\text { IV. } &\text { no effect }&\text { decrease }
\end{array}$

Question

If a corporation appropriates retained earnings for treasury stock transactions, the appropriation will affect total amounts for retained earnings and stockholders' equity as $\begin{array}{lll}
&\text { Total } & \text { Total } \
&\text { Retained Earnings } & \text { Stockholders' Equity } \ 
\text { I. } & \text { decrease} & \text { decrease } \
\text { II. } & \text { decrease } & \text { no effect }\
\text { III. } &\text { no effect }& \text {  no effect} \
\text { IV. } &\text { no effect }&\text { decrease } 
\end{array}$

Quizplus · Accepted Answer

Appropriating retained earnings for treasury stock transactions does not decrease the total amount of retained earnings or stockholders' equity; it merely designates a portion of retained earnings for a specific purpose, without changing the total amounts.

If a Corporation Appropriates Retained Earnings for Treasury Stock Transactions