The sale of treasury stock cannot result in
A)an increase in Retained Earnings.
B)the crediting of Paid-in Capital,Treasury Stock.
C)the debiting of Paid-in Capital,Treasury Stock.
D)an increase in total stockholders' equity.

Question

Quizplus · Accepted Answer

The sale of treasury stock represents a decrease in the amount of the company's own shares, which were previously issued and outstanding. Therefore, the transaction does not generate new capital for the company and does not increase retained earnings. Instead, it can lead to a reduction in total stockholders' equity, as the amount paid to repurchase the shares is subtracted from the company's assets on the balance sheet. Choices B, C, and D are incorrect because they reflect the accounting treatment of the transaction, which involves the transfer of funds from one equity account to another or the elimination of treasury stock at a price higher than its cost.

The Sale of Treasury Stock Cannot Result in