When treasury stock was sold at cost,Cash was debited and Common Stock was credited.This error would cause:

Question

Quizplus · Accepted Answer

When treasury stock is sold at cost, the correct accounting treatment is to debit cash and credit treasury stock. Crediting common stock instead of treasury stock does not affect the total amount of assets, liabilities, or stockholders' equity, but it does misclassify the equity accounts. Therefore, it doesn't cause an overstatement or understatement of assets, liabilities, or total stockholders' equity, making D the correct choice.

When Treasury Stock Was Sold at Cost,Cash Was Debited and Common