Which of the following best describes a possible result of treasury stock transactions by a corporation?
A) May increase but not decrease retained earnings.
B) May increase net income if the cost method is used.
C) May decrease but not increase retained earnings.
D) May decrease but not increase net income.

Question

Quizplus · Accepted Answer

Treasury stock transactions involve buying back shares of the company's own stock. This usually results in a decrease in the company's retained earnings because the money used to buy the stock is no longer available for other uses. It does not affect net income because the company is not earning or losing money by buying back its own stock.

Which of the Following Best Describes a Possible Result of Treasury