Team Shirts purchased $5,000 worth of its own stock in the stock market.The transaction would _________ cash by $5,000 and _________ shareholders' equity by $5,000.
A)increase; increase
B)decrease; decrease
C)increase; decrease
D)decrease; increase

Question

Quizplus · Accepted Answer

Purchasing its own stock decreases cash because the company is spending money. It also decreases shareholders' equity because treasury stock purchases are deducted from equity.

Team Shirts Purchased $5,000 Worth of Its Own Stock in the Stock