Skip to main content

Business Accounting Connect Access Card for Financial Accounting: Information and Decisions

The purchase of treasury stock means buying back the shares issued by the company. It reduces the share capital of the company. Company purchase treasury stock to reduce its dividend expenses. To explain: The effect on total assets and equity of purchaser of treasury stock. When a company purchase treasury stock the cash of the company gets decrease. The purchase of treasury stock also decreases the equity of the company as the company buy back its shares by paying cash. For example: if a company purchase treasury stock of $50,000, then there will be a decrease in equity by $50,000 and cash will also be decrease by $50,000. Therefore, with the purchase of treasury stock, the assets and equity of a company gets decrease with equal amount.

The purchase of treasury stock means buying back the shares issued by the company. It reduces the share capital of the company. Company purchase treasury stock to reduce its dividend expenses. To explain: The effect on total assets and equity of purchaser of treasury stock. When a company purchase treasury stock the cash of the company gets decrease. The purchase of treasury stock also decreases the equity of the company as the company buy back its shares by paying cash. For example: if a company purchase treasury stock of $50,000, then there will be a decrease in equity by $50,000 and cash will also be decrease by $50,000. Therefore, with the purchase of treasury stock, the assets and equity of a company gets decrease with equal amount.

Solution Summary: The author explains that the purchase of treasury stock reduces the share capital of the company.

Connect Access Card for Financial Accounting: Information and Decisions

Connect Access Card for Financial Accounting: Information and Decisions

8th Edition

ISBN: 9781259662966

Author: John J Wild

Publisher: McGraw-Hill Education

See similar textbooks

Expert Solution & Answer

Want to see the full answer?

Check out a sample textbook solution

Blurred answer

Chapter 11, Problem 14DQ

Chapter 11, Problem 16DQ

Students have asked these similar questions

choose best answer financial accounting

What is the couple marriage penalty or benefit?

What is the couple marriage penalty or benefit? General accounting

Chapter 11 Solutions

Connect Access Card for Financial Accounting: Information and Decisions

Ch. 11 - Prob. 1DQ Ch. 11 - How are organization expenses reported?Ch. 11 - Prob. 3DQ Ch. 11 - What is the difference between authorized shares...Ch. 11 - Prob. 5DQ Ch. 11 - Prob. 6DQ Ch. 11 - Prob. 7DQ Ch. 11 - Prob. 8DQ Ch. 11 - Prob. 9DQ Ch. 11 - Prob. 10DQ

Ch. 11 - Prob. 11DQ Ch. 11 - Prob. 12DQ Ch. 11 - What is the didfference between a stock dividend...Ch. 11 - Prob. 14DQ Ch. 11 - Prob. 15DQ Ch. 11 - Prob. 16DQ Ch. 11 - Prob. 17DQ Ch. 11 - Prob. 18DQ Ch. 11 - Prob. 19DQ Ch. 11 - Prob. 20DQ Ch. 11 - Prob. 21DQ Ch. 11 - Prob. 22DQ Ch. 11 - Prob. 1QS Ch. 11 - Prob. 2QS Ch. 11 - Prob. 3QS Ch. 11 - Prob. 4QS Ch. 11 - Prob. 5QS Ch. 11 - Prob. 6QS Ch. 11 - Prob. 7QS Ch. 11 - Prob. 8QS Ch. 11 - Prob. 9QS Ch. 11 - Prob. 10QS Ch. 11 - Prob. 11QS Ch. 11 - Prob. 12QS Ch. 11 - Prob. 13QS Ch. 11 - Prob. 14QS Ch. 11 - Prob. 15QS Ch. 11 - Prob. 16QS Ch. 11 - Dividend yield A3 Foxburo Company expects to pay a...Ch. 11 - Prob. 18QS Ch. 11 - Prob. 19QS Ch. 11 - Prob. 1E Ch. 11 - Prob. 2E Ch. 11 - Prob. 3E Ch. 11 - Prob. 4E Ch. 11 - Prob. 6E Ch. 11 - Prob. 7E Ch. 11 - York’s outstanding stock consists of 80,000 shares...Ch. 11 - Use the data in Exercise 118 to determine the...Ch. 11 - Prob. 10E Ch. 11 - Prob. 11E Ch. 11 - Prob. 12E Ch. 11 - Prob. 13E Ch. 11 - Prob. 14E Ch. 11 - Prob. 15E Ch. 11 - Prob. 16E Ch. 11 - Prob. 17E Ch. 11 - Prob. 18E Ch. 11 - Prob. 1PSA Ch. 11 - Prob. 2PSA Ch. 11 - Prob. 3PSA Ch. 11 - Prob. 4PSA Ch. 11 - Prob. 5PSA Ch. 11 - Prob. 1PSB Ch. 11 - Prob. 2PSB Ch. 11 - Prob. 3PSB Ch. 11 - Prob. 4PSB Ch. 11 - Refer to Apples financial statements in Appendix A...Ch. 11 - Prob. 2BTN Ch. 11 - Harriet Moore is an accountant for New World...

Knowledge Booster

Background pattern image

Similar questions

SEE MORE QUESTIONS

Recommended textbooks for you

Century 21 Accounting Multicolumn Journal
Accounting
ISBN:9781337679503
Author:Gilbertson
Publisher:Cengage
Century 21 Accounting General Journal
Accounting
ISBN:9781337680059
Author:Gilbertson
Publisher:Cengage
College Accounting, Chapters 1-27
Accounting
ISBN:9781337794756
Author:HEINTZ, James A.
Publisher:Cengage Learning,
EBK CONTEMPORARY FINANCIAL MANAGEMENT
Finance
ISBN:9781337514835
Author:MOYER
Publisher:CENGAGE LEARNING - CONSIGNMENT
Quickbooks Online Accounting
Accounting
ISBN:9780357391693
Author:Owen
Publisher:Cengage
Financial Accounting Intro Concepts Meth/Uses
Finance
ISBN:9781285595047
Author:Weil
Publisher:Cengage

Text book image

Century 21 Accounting Multicolumn Journal

Accounting

ISBN:9781337679503

Author:Gilbertson

Publisher:Cengage

Text book image

Century 21 Accounting General Journal

Accounting

ISBN:9781337680059

Author:Gilbertson

Publisher:Cengage

Text book image

College Accounting, Chapters 1-27

Accounting

ISBN:9781337794756

Author:HEINTZ, James A.

Publisher:Cengage Learning,

Text book image

EBK CONTEMPORARY FINANCIAL MANAGEMENT

Finance

ISBN:9781337514835

Author:MOYER

Publisher:CENGAGE LEARNING - CONSIGNMENT

Text book image

Quickbooks Online Accounting

Accounting

ISBN:9780357391693

Author:Owen

Publisher:Cengage

Text book image

Financial Accounting Intro Concepts Meth/Uses

Finance

ISBN:9781285595047

Author:Weil

Publisher:Cengage

SEE MORE TEXTBOOKS