Which statement best describes the accounting when a company cancels its own shares at an amount lower than the average share value?
A)Contributed surplus and retained earnings will be credited.
B)Contributed surplus and retained earnings will be debited.
C)Contributed surplus will be credited,thereby increasing equity.
D)Contributed surplus will be debited,thereby decreasing equity.

Question

Quizplus · Accepted Answer

When a company cancels its own shares at an amount lower than the average share value, the difference is credited to contributed surplus, increasing equity.

Which Statement Best Describes the Accounting When a Company Cancels