All of the following would result in an increase in stockholders equity except:
A) the company sold common stock at par value.
B) the company sold common stock above par value.
C) the company purchased treasury stock.
D) the company had positive net income greater than dividends paid.

Question

Quizplus · Accepted Answer

Purchasing treasury stock reduces stockholders equity as it is the company buying back its own shares. Option A and B would both increase stockholders equity as it involves the company selling shares. Option D would also increase stockholders equity as positive net income means the company is generating profits and can potentially pay out dividends to shareholders.

All of the Following Would Result in an Increase in Stockholders