A possible result of the reacquisition and cancellation of shares by a corporation is that this may
A)directly increase but not decrease retained earnings.
B)increase net income if a gain is recognized.
C)directly decrease but not increase retained earnings.
D)decrease but not increase net income.
Shareholders' Equity 15- 13

Question

Quizplus · Accepted Answer

When a corporation reacquires and cancels its own shares, it reduces the number of shares outstanding, which directly decreases retained earnings as the cost of reacquisition is deducted from it.

A Possible Result of the Reacquisition and Cancellation of Shares