The purchase of treasury shares for cash reduces the corporation's assets and equity by equal amounts.

Name: The purchase of treasury shares for cash reduces the corporation's assets and equity by equal amounts.
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Question

Quizplus · Accepted Answer

When a corporation purchases treasury shares for cash, it uses its assets (cash) to buy back its own shares. As a result, both assets and equity decrease by the same amount, since equity is the residual value of assets after deducting liabilities. Therefore, the statement is true.

The Purchase of Treasury Shares for Cash Reduces the Corporation's