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What effect does the purchase of treasury stock have on net income?
Wiki User
∙ 9y ago
Purchase of treasury stock has no effect on the net income of a business. The purchase may affect cash flow of the business. No profit or loss is claimed when shares are re-issued at above or below cost.
Wiki User
∙ 9y ago
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Is this true or false - Treasury stock transactions never increase retained earnings or net income?
true. Treasury stock never affects Net Income. Treasury stock may decrease Retained earnings but it does not increase it.
What effect does the purchase of treasury stock have on total stockholders equity increase decrease or none stays the same?
decrease
Is treasury stock the same as capital stock?
Treasury stock is contra of capital stock used by company to purchase own capital stock to reduce the paid in capital.
How do you record journal entry for purchase of treasury stock?
debit treasury stockcredit bank / cash
The journal entry to record the purchase of treasury stock will cause total stockholders' equity to decrease by the amount of the cost of the treasury stock?
true!
Is this true or false - Treasury stock transactions never increase retained earnings or net income?
true. Treasury stock never affects Net Income. Treasury stock may decrease Retained earnings but it does not increase it.
What effect does the purchase of treasury stock have on total stockholders equity increase decrease or none stays the same?
decrease
Is treasury stock the same as capital stock?
Treasury stock is contra of capital stock used by company to purchase own capital stock to reduce the paid in capital.
Purchase of treasury stock is financing activities?
Yes
Assume the cost method is used to account for treasury stock What should the gain on the sale of treasury stock be classified as?
According to US GAAP, any gains in the sale of treasury stock cannot be recognized as income throught the income statement but must be run through paid in capital.
How do you record journal entry for purchase of treasury stock?
debit treasury stockcredit bank / cash
The journal entry to record the purchase of treasury stock will cause total stockholders' equity to decrease by the amount of the cost of the treasury stock?
true!
Would a purchase of treasury stock affect retained earnings?
Answer:The purchase of treasury stock does not affect retained earnings. When the company owns treasury stock, then 'treasury stock' has a debit balance. It is nevertheless presented under equity, with a negative sign.(Technically, when a T-account switches from debit to credit - or the other way around - the sign flips.)Nevertheless, a subsequent sale of treasury stock can affect retained earnings when the amount received is below the cost (a loss is made). This loss is subtracted from retained earnings if there are no cumulative gains on prior sales of treasury stock.
Is a commonly used method for accounting for the purchase and resale of treasury stock is the derivative method?
no
Is treasury stock included in common equity?
Treasury stock is contra to share capital account as it is those shares which company purchase from own capital to reduce the share capital amount.
What effect will the declaration and distribution of a stock dividend have on the net income and cash flows?
19. What effect will the declaration and distribution of a stock dividend have on net income and cash flows? (Points : 2)No effect on net income or cash flowsNo effect on net income, decrease cash flowsDecrease net income, decrease cash flowsIncrease net income, no effect on cash flows
What are the factors affecting owner's equity?
The issuance of stock. The accumulation of profits and/or losses (Retained Earnings). The payment of dividends. The re-purchase of your own stock (Treasury Stock).
