The purchase of treasury stock will result in
A)no net changes in assets,liabilities,or stockholders' equity.
B)a decrease in assets and a decrease in stockholders' equity.
C)a decrease in one asset account and an increase in a different asset account.
D)a decrease in assets and a decrease in liabilities.

Question

Quizplus · Accepted Answer

When a company purchases their own stock, it reduces the amount of equity in the company, resulting in a decrease in stockholders' equity. This decrease in equity is balanced by a decrease in assets, as the company is using cash to purchase the stock. Liabilities remain unaffected by this transaction. Therefore, the correct answer is B.

The Purchase of Treasury Stock Will Result in