a corporation purchases 17000 shares of its own $20 par common stock for $25 per share, recording it at cost. What will be the effect on total stockholders' equity? A.) Increase by $425000 B.) Decrease by $425000 C.) Decrease by $85000 D.) Decrease by $340000

a corporation purchases 17000 shares of its own $20 par common stock for $25 per share, recording it at cost. What will be the effect on total stockholders' equity? A.) Increase by $425000 B.) Decrease by $425000 C.) Decrease by $85000 D.) Decrease by $340000

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

a corporation purchases 17000 shares of its own $20 par common stock for $25 per share, recording it at cost. What will be the effect on total stockholders' equity?

A.) Increase by $425000

B.) Decrease by $425000

C.) Decrease by $85000

D.) Decrease by $340000

Please explain other options why these are incorrect dont use ai boats thank you

Definition Definition Assets available to stockholders after a company's liabilities are paid off. Stockholders’ equity is also sometimes referred to as owner's equity. A stockholders’ equity or book value generally includes common stock, preferred stock, and retained earnings and is an indicator of a company's financial strength.

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The Financial Sector-End of Chapter Problem You are discussing buying stocks with a friend and mention that you want to buy a few shares of Amazon stock. Your friend says that's a terrible idea because Amazon has never paid dividends to its shareholders so you would never receive any of Amazon's profits or make any money off the stock. What might you say to your friend to defend your desire to purchase a few shares of Amazon stock? You explain that the price of Amazon stock will always have to rise because dividends are not paid. the fundamental value of the stock is not determined by the dividends paid, but by the present value of future profits. purchasing stock is better than purchasing bonds because stockholders are the first in line to get paid if the company goes bust. buying a few shares will give you a significant say in how Amazon will be run in the future.