When a corporation buys a portion of its own common shares, the recording must conform to the:
A) matching principle.
B) cost principle.
C) revenue recognition principle.
D) accrual principle.

Question

Quizplus · Accepted Answer

When a corporation buys its own common shares, it is considered a treasury stock transaction and must be recorded at cost, in accordance with the cost principle. The matching principle relates to the timing of expenses and revenue, the revenue recognition principle relates to the recognition of revenue, and the accrual principle relates to the recognition of expenses when they are incurred, regardless of when the payment is made.

When a Corporation Buys a Portion of Its Own Common