final Flashcards
1
Q
what is NOT accomplished by accounting?
A
eliminates the need for interpreting financial data
2
Q
who is an EXTERNAL user of accounting information?
A
lender
3
Q
the primary objective of financial accounting is to:
A
provide accounting information that serves external users
4
Q
the area of accounting aimed at serving the decision-making needs of internal users is:
A
managerial accounting
5
Q
who is NOT an external user of accounting information?
A
customers
6
Q
what is NOT true regarding ethics?
A
ethics do not affect the operations or outcome of a company
7
Q
the rule that requires financial statements to assume that business will continue operating instead of being closed or sold is the:
A
going-concern assumption
8
Q
how should a purchase of land be recorded in the purchasers book? the worth or the final selling price?
A
final selling price
9
Q
the rule that requires revenue to be recognized when (1) goods and services are provided to the costumer and (2) the amount expected to be received from the customer is called the:
A
revenue recognition principle
10
Q
which accounting principle would require an accounting firm to record the bookkeeping revenue in the following year and not the year the cash was received?
A
revenue recognition principle
11
Q
which accounting principle requires that all goods and services purchased be recorded at actual cost?
A
measurement (cost) principle
12
Q
which accounting principle prescribes that a company record its expenses incurred to generate the revenue reported?
A
expense recognition (matching) principle
13
Q
revenue is properly recognized:
A
when goods or services are provided to customers and at the amount expected to be received from the customer
14
Q
if a company uses $1,300 of its cash to purchase supplies, the effect on the accounting equation would be:
A
one asset increases $1,300 and another asset decreases $1,300, causing no effect
15
Q
if a company purchases equipment costing $4,500 on credit, the effect on the accounting equation would be:
A
assets increase $4,500 and liabilities increase $4,500
16
Q
net income:
A
occurs when revenue exceeds expenses
17
Q
resources a company owns or controls that are expected to yield future benefits are:
A
assets
18
Q
increases in equity from a company’s sales of products or services to customers are:
A
revenues
19
Q
the difference between a company’s assets and its liabilities (net assets) is:
A
equity
20
Q
creditors’ claims on assets are called:
A
liabilities
21
Q
the description of the relation between a company’s assets, liabilities, and equity, which is expressed as Assets=Liabilities+equity is known as the:
A
accounting equation
22
Q
revenues are:
A
increases in equity from a company’s sales of products and services
23
Q
when expenses exceed revenues, the result is called:
A
net loss
24
Q
assets created by selling goods and services on CREDIT are:
A
accounts receivable
25
a company paid off $30,000 of its accounts payable in cash. what would be the effects of this transaction on the accounting equation?
assets decrease $30,000; liabilities decrease $30,000
26
if a company billed a client for $10,000 of consulting work completed, the accounts receivable asset increases by $10,000 and:
revenue increases by $10,000
27
if a company paid $38,000 of its accounts payable in cash, what was the effect on the accounting equation?
assets would decrease $38,000, liabilities would decrease $38,000, equity remains unchanged
28
equity is:
the owner's claim on assets
29
which of the following is not a financial statement:
statement of changes in assets
30
the financial statement that reports whether the business earned a profit also lists the revenues and expenses is called the:
income statement
31
a balance sheet lists:
the types and amounts of assets, liabilities, and equity of a business at a point in time
32
a financial statement providing information that helps users understand a company's financial status, and which lists the types and amounts of assets, liabilities, and equity as of a specific date is called a:
balance sheet
33
a company purchases a truck for $20,000 after talking the seller down from $22,000. the company believes the truck is worth $30,000 and that they got a great deal. what amount should the company record on its financial statements for the truck?
$20,000
34
accounts payable appear on which type of financial statement?
balance sheet
35
which term is NOT reported on the INCOME statement?
assets owned by a business
36
rent expense appears on which statement?
income statement
37
what is NOT an asset account?
accounts payable
38
what is NOT included in calculation of net income?
accounts receivable
39
what is NOT classified as a liability?
accounts receivable
40
example of a liability account:
accounts payable
41
what account is NOT included in the asset section of the balance sheet?
services revenue
42
what is NOT included in the calculation of net income?
cash
43
example of net loss on income statement:
total revenues: $70,000, total expenses: $74,000
44
are accounts receivable increased by customer payments?
no
45
a record of the increases and decreases in a specific asset, liability, equity, revenue, or expense is knows as:
an account
46
a company purchased $20,100 of equipment on credit. the journal entry to record this transaction consists of a:
debit to equipment for $20,100; credit to accounts payable for $20,100
47
what is NOT used to calculate net income?
-cash
-accounts receivable
-office supplies
-office equipment
-land
-accounts payable
48
unearned revenues are:
liabilities recorded when customers pay in advance for products or services
49
a company's written promissory note to pay a future amount is a:
note payable
50
prepaid accounts (or prepaid expenses) are:
assets from prepayments of future expenses
51
the collection of all accounts and their balances is called a:
ledger (or general ledger)
52
a credit (T-account):
is on the right side of a T-account
53
a debit (T-account):
is on the left side of a T-account
54
correct or incorrect: the normal balance of an expense account is a credit
incorrect
55
a credit is used to record an increase in this account:
accounts payable
56
what account is classified as a liability in a company's chart of accounts:
unearned revenue
57
what account is classified as an asset in a company's chart of accounts:
accounts receivable
58
is supplies an asset account?
yes
59
example of a liability account:
accounts payable
60
example of an account that impacts the equity of a business:
utilities expense
61
what is NOT an equity account?
unearned revenue
62
what is NOT an asset account?
services revenue
63
a tool that represents a ledger amount and is used to show the effects of transactions is called a:
T-account
64
an account balance is:
the difference between the total debits and total credits for an account including the beginning balance
65
what is a wages payable account's normal balance?
credit
66
a decrease to an unearned revenue account is recorded by using a:
debit
67
a credit entry:
decreases asset accounts and increases liability accounts
68
a double-entry accounting system is an accounting system:
that records the effect of each transaction in at least two accounts, with at least one debit and one credit
69
a company paying a utilities bill is recorded in the general journal entry as:
debit to utilities expense for $300
70
a company purchasing office supplies on credit would be recorded in the general journal entry as:
credit to accounts payable
71
a company purchases $7,000 of supplies in cash. it appears in the journal as:
debit supplies $7,000; credit cash $7,000
72
a company paid their $500 utility bill in cash. it appears in the journal as:
debit utilities expense $500; credit cash $500
73
what is the journal entry for a company that purchases a 5-month insurance policy that begins that day in cash for $2,500?
debit prepaid insurance $2,500; credit cash $2,500
74
what is the journal entry if a company billed its client for catering services of $1,000?
debit accounts receivable $1,000; credit catering revenue $1,000
75
what is the journal entry for a company that receives a $1,500 payment from a client for the previous month's services?
debit cash $1,500; credit accounts receivable $1,500
76
what is the journal entry for a company that receives $2,000 cash in advance for a service not yet provided?
debit cash $2,000; credit unearned revenue $2,000
77
what is the journal entry for a company that paid $300 cash to employees for work performed in a current period?
debit salaries expense $300; credit cash $300
78
what is the journal entry for a company that receives $400 cash immediately after providing a service?
debit cash $400, credit revenue $400
79
what is the journal entry for a company that provided a service for $12,000 and will be payed in 30 days?
debit accounts receivable $12,000; credit services revenue $12,000
80
what is the journal entry for a company paid $12,000 in cash immediately after providing a service?
debit cash $12,000; credit services revenue $12,000
81
what is the journal entry for a company that pays $200 cash for a months utilities?
debit utilities expense $200, credit cash $200
82
the process of transferring journal entry information to the ledger is called:
posting
83
a company purchased equipment for cash. the journal entry include a:
credit to the cash account
84
what are the accounts that would normally have balances in the debit column of a business's trial balance?
assets and expenses
85
what are the accounts that would normally have balances in the credit column of a business's trial balance?
revenues and liabilities
86
a list of all ledger accounts and their balances at a point in time is called a:
trial balance
87
what is NOT an asset account?
supplies expense
88
accounts that would be classified as asset accounts on the chart of accounts:
cash, prepaid insurance, equipment
89
which financial statement reports an organization's financial position at a single point in time?
balance sheet
90
net income:
occurs when revenues exceed expenses
91
a balance sheet lists:
the types and amounts of assets, liabilities, and equity of a business at a point in time
92
what is NOT included in the liabilities section of the balance sheet?
cash
93
a credit is used to record an increase in which account?
accounts payable
94
identify an account that is classified as an asset account:
supplies
95
identify an account classified as a liability account:
accounts payable
96
identify an account that normally has a credit balance:
wages payable
97
a decrease in an unearned revenue account is recorded as:
a debit
98
a credit entry decreases and increases what accounts?
decreases asset accounts and increases liability accounts
99
what is NOT a time period commonly used by companies in reporting account information?
fourteen-month interval
100
the length of time covered by a set of periodic financial statements (which could be monthly, quarterly, semiannually, or annually) is referred to as the:
accounting period
101
the accounting principle that requires revenue to be recorded when goods or services are provided to customers at an amounts expected to be received from customers is the:
revenue recognition principle
102
adjusting entries affect:
both income statement and balance sheet accounts
103
the main purpose of adjusting entries is to:
recognize transactions and events that are not yet recorded
104
the principle that requires expenses to be reported in the same period as the revenues that were recognized as a result of those expenses is the:
expense recognition (matching) principle
105
what is NOT accomplished by an adjusting entry
assuring that external transaction amounts remain unchanged
106
the approach to preparing financial statements based on recording revenues when products and services are delivered and recording expenses incurred is:
accrual basis accounting
107
prepaid expenses, depreciation expense, accrued expenses, unearned revenues, and accrued revenues are all examples of:
items that require adjusting entries
108
accrual basis accounting:
increases the comparability of financial statements from period to period
109
what account item does NOT require an adjusting entry
cash
110
on July 1 a company paid $7,500 cash for management services to be performed over a two-year period. on July 1 the company should record:
a debit to a prepaid expense and a credit to cash for $7,500
111
accrued revenues:
at the end of one accounting period result in cash receipts in a future period
112
the contra account that includes total depreciation expense for all prior periods for which as asset was used:
is referred to as accumulated depreciation
113
the expense recorded from allocating the cost of equipment to the periods in which is it used is called:
depreciation expense
114
prior to recording adjusting entries, the office supplies account has a $380 debit balance. a physical count of the supplies showed $103 of unused supplies available. the required adjusting entry is:
debit office supplies expense $277 and credit office supplies $277
115
cash received in advance from clients for legal services is recorded in unearned revenue. the end-of-period adjusting entry to record the portion of revenue that has been EARNED is:
debit unearned revenue and credit legal revenue
116
unearned revenue is reported in the financial statements as:
a liability on the balance sheet
117
what asset is NOT depreciated?
land
118
the adjusting entry at the end of an accounting period to record the unpaid salaries of employees for work provided is:
debit salaries expense and credit salaries payable
119
the adjusting entry to record salaried earned, but unpaid, at the end of teh accounting period should be recorded as follows:
debit salaries expense and credit salaries payable
120
the difference between the cost of an asset and the accumulated depreciation for that asset is called:
book value
121
id accrued salaries were recorded on December 31 with a debit to salaries expense and a credit to salaries payable, the entry to record payment of these wages on the follow January 5 would include:
a debit to salaries payable and a credit to cash
122
the correct adjusting entry to accrued and unpaid employee salaried of $8,000 on December 31 is:
debit salary expense $8,000; credit salaries payable $8,000
123
a trial balance prepared AFTER adjustments have been recorded is called an:
adjusted trial balance
124
a trial balance prepared BEFORE any adjustments have been recorded is an:
unadjusted trial balance
125
financial statements are typically prepared in the following order:
income statement, statement of retained earnings, balance sheet
126
an annual reporting period consisting of any twelve consecutive months or 52 weeks is known as:
fiscal year
127
the two accounting principles that are critical to the adjusting process used in accrual accounting are:
revenue recognition and expense recognition (matching)
128
on December 31, a company received a $215 utility bill for December that it will not pay until January 15. the adjusting entry needed on December 31 to accrue this expense is:
debit utilities expense $215; credit accounts payable $215
129
what account is a permanent account:
accounts payable
130
journal entries that transfer the end-of-period balances in revenue accounts to a permanent equity account as known as:
closing entries
131
closing entries are necessary at the end of each period to:
ensure that temporary accounts begin each period with zero balances
132
the recurring steps performed each reporting period in preparing financial statements, starting with analyzing and recording transactions in the journal and continuing through preparing the post-closing trial balance is referred to as the:
accounting cycle
133
a classified balance sheet:
organizes assets and liabilities into subgroups
134
two common subgroups for liabilities on a classified balance sheet are:
current liabilities and long-term liabilities
135
what is classified as a current asset?
accounts receivable
136
what is classified as a plant asset?
equipment
137
the temporary account used only for the closing process that contains a credit for total revenues (and gains) and a debit for total expenses (and losses) is the:
income summary account
138
a company paid the sole shareholder $5,000 in dividends during the current year. the entry to close the dividends account at the end of the year is:
debit retained earnings $5,000; credit dividends $5,000
139
the income summary account is used to:
closed the revenue and expense accounts
140
after preparing and posting the closing entries for revenues and expenses, the income summary account has a debit balance of $34,000. the entry to close the income summary account will be:
debit retained earnings $34,000; credit income summary $34,000
141
inventory is classified on the balance sheet as a:
current asset
142
what is untrue regarding merchandising inventory?
merchandise inventory appears on the balance sheet of a service company
143
multiple-step income statements show
both gross profit and income from operations
144
sales less sales discounts, less sales returns and allowances equals:
net sales
145
sales returns:
refer to customers returning merchandise back to the seller for a refund
146
gross profit is equal to:
sales less cost of goods sold
147
the arrangements between buyer and seller as to when payments for merchandise are to be made are called:
credit terms
148
in credit terms of 3/15, n/45, the "3" represents the:
percent in cash discount
149
the credit terms 2/10, n/30 are interpreted as:
a 2% cash discount if the amount is paid within 10 days, or the full balance due in 30 days
150
who is responsible for the freight costs when the terms are FOB shipping point?
the buyer
151
who is responsible for the freight costs when the terms are FOB destination?
the seller
152
what type of company would normally offer trade discounts to its customers
wholesalers
153
the inventory system employing accounting records that continuously disclose the amount of inventory is called:
perpetual
154
under the periodic inventory system, the journal entry to record the purchase of inventory will include a debit to:
purchases
155
the primary difference between the periodic and perpetual inventory systems is that a:
periodic system determines the inventory on hand only at the end of the accounting period
156
when purchases of merchandise are made on an account with a perpetual inventory system, the transaction is recorded as:
debit inventory; credit accounts payable
157
a company sold merchandise for $10,000 cash. the cost of the goods sold was $7,590. the journal entries to record this transaction under the PERPETUAL inventory system would be:
debit cash $10,000; credit sales $10,000
debit cost of goods sold $7,590; credit inventory $7,590
158
expenses that support a company's overall operations and include expenses related to accounting, human resources, and finance are known as:
general and administrative expenses
159
expenses that are incurred directly or entirely in connection with the selling of merchandise are classified as:
selling expenses
160
inventory shrinkage is recorded when:
there is a difference between a physical count of inventory and the inventory records
161
which document authorizes the purchase of inventory from an approved vendor?
the purchase order
162
what document is NOT used for inventory control?
a petty cash voucher
163
taking a physical count of inventory:
should be done near year-end
164
physical counts of inventory are used to:
adjust the inventory account balance to the actual inventory available
165
which method is appropriate for a business whose inventory consists of a relatively small number of unique, high cost items?
specific identification
166
ending inventory is made up of the oldest purchases when a company uses:
last in, first out
167
when merchandise sold is assumed to be in the order in which the purchases were made, the company is using
first in, first out
168
the inventory costing method that smooths out erratic changes in costs is:
weighted average
169
what is NOT an inventory costing method?
gross margin method
170
if the cost of an item of inventory is $60 and the current replacement cost is $75, the amount included in the inventory according to the lower of cost market is:
$60
171
damaged, obsolete (out-of-date), and/or deteriorated goods that can be sold:
are included in inventory at their net realizable value
172
internal control systems are:
required by Sarbanes-Oxley (SOX) to be documented and verified if the company's stock is traded on an exchange (a public company)
173
the objectives of internal control are to:
provide reasonable assurance that assets are safeguarded and used for business purposes, business information is accurate, and laws and regulations are complied with
174
what reflects a weak control system?
a single employee is responsible for collecting and recording of cash
175
what are the processes and procedures a company uses to safeguard its assets, process information correctly, and ensure its compliance with laws and regulations called?
internal controls
176
internal control does NOT consist of policies and procedures that
guarantee the company will earn a profit
177
the cash account in the company's ledger is an
asset with a normal debit balance
178
cash equivalents:
are readily convertible to a known cash amount
179
what would NOT be included with the cash and cash equivalents on the balance sheet?
short-term receivables
180
a bank statement:
shows the activity that increased or decreased the company's account balance
181
a bank reconciliation should be prepared periodically because:
and differences between the company's records and the bank's records should be determined, and any errors made by either party should be discovered and corrected
182
the amount of deposits in transit is included on the bank reconciliation as an:
addition to the balance per bank statement
183
outstanding checks refer to checks that have been:
written by the depositor, subtracted on the depositor's books, and sent to the payee but not yet turned in for payment at the bank statement date
184
the amount of outstanding checks is included on the bank reconciliation as a:
deduction from the balance per bank statement
185
a bank reconciliation should be prepared:
to explain ant difference between the company's balance per books with the balance per bank
186
the entry to establish a petty cash fund includes:
a debit to petty cash; a credit to cash
187
the type of accounts and normal balance of petty cash is an:
asset, debit
188
the amount of cash to be reported on the balance sheet at June 30 is the:
adjusted balance appearing in the bank reconciliation for June 30
189
a promissory note received from a customer in exchange for an account receivable is recorded by the payee as:
a note receivable
190
a company pledges its receivables so it can:
borrow money
191
a promissory note:
is a written promise to pay a specified amount, usually with interest, either on demand or at a stated future date
192
a finance company or bank that acquires ownership of another company's accounts receivable is called a:
factor
193
what is NOT a benefit to factoring receivables?
there are no fees for factoring
194
the allowance method that assumes a percent of a company's credit sales for the period is noncollectable is:
the percent of sales method
195
a method of estimating bad debts expense that involves classifying receivables by how long they are past due is called the:
aging of accounts receivable method
196
what is FALSE about allowance for doubtful accounts?
it is a liability account
197
how to accept a note from customer:
debit notes receivable; credit accounts receivable
198
using the allowance method for bad debts, the end of the period adjusting entry for estimated bad debts is:
debit bad debts expense; credit allowance for doubtful accounts
199
plant assets are defined as
tangible assets used in a company's operations that have a useful life of more than one accounting period
200
what is NOT a relevant factor in computing depreciation?
market value
201
salvage value is:
an estimate of an asset's value at the end of its useful life
202
depreciation:
is the process of allocating the cost of a plant asset to expense while it is in use
203
the useful life of a plant asset is:
the length of time it is used in a company's operations
204
the straight-line depreciation method and double-declining-balance depreciation method:
produce the same total depreciation over an asset's useful life
205
what is NOT classified as a plant asset?
patent
206
the formula to compute annual straight-line depreciation is:
(cost minus salvage value) divided by the useful life in periods
207
the total cost of an asset minus accumulated depreciation is called:
book value
208
once the estimated depreciation expense for an asset is calculated:
it may be revised to reflect changes in the asset's estimated salvage value or useful life
209
the depreciation method that charges the same amount of expense to each period of the asset's useful life is called:
straight-line depreciation
210
the depreciation method that allocates an equal portion of the total depreciable cost for a plant asset to each unit produced is called:
units-of-production depreciation
211
the depreciation method which uses a depreciation rate that is a multiple of the straight-line rate is called
declining-balance depreciation
212
an asset is said to be fully depreciated when:
accumulated depreciation equals the asset's cost
213
natural resources are:
assets that are physically consumed when used such as standing timber, mineral deposits, and oil and gas fields
214
depletion is:
the process of allocating the cost of a natural resource to the period when it is consumed
215
intangible assets do NOT include
land held as an investment
216
amortization is:
allocation of the cost of an intangible asset to expense over its estimated useful life
217
what is NOT part of the cost of equipment
repair costs due to damage from unpacking
218
liabilities that are due within one year (or the company's operating cycle if longer) are:
current liabilities
219
obligations due after one year (or the company's operation cycle if longer) are reported as:
long-term liabilities
220
accounts payable are:
amounts owed to suppliers for products or services purchased on credit
221
amounts received in advance from customers for future products or services:
are liabilities
222
sales taxes payable is reported as a:
current liability
223
when a note comes due, the difference between the amount borrowed and the amount repaid is:
interest
224
gross pay is:
total compensation earned by an employee before any deductions
225
the employer should record payroll deductions as:
current liabilities
226
federal insurance contributions act (FICA) taxes include:
social security and medicare taxes
227
the amount of federal income taxes withheld from an employee's paycheck is determined by:
the employee's incomes and number of withholding allowances the employee claims
228
the wage and tax statement given to each employee annually is:
form W-2
229
employer payroll taxes:
are an added expense beyond the wages and salaries earned by employees
230
a bond is issued at par value when:
the market rate of interest is teh same as the contract rate of interest
231
when a bond sells at a premium:
the contract rate is above the market rate
232
a bond sells at a discount when:
contract rate is below the market rate
233
The legal contract between the bond issuer and the bondholders is called a:
bond indenture
234
The document which bondholders receive that is evidence of the issuing company’s debt is referred to as a:
bond certificate
235
A disadvantage of bond financing is:
bonds pay periodic interest and require the repayment of par value at maturity
236
the advantage of bonds is:
bonds do not affect owner control
237
the discount on bonds payable account is:
a contra liability
238
the premium on bonds payable account is an:
adjunct liability account
239
The carrying value of bonds at maturity always equals:
the par value of the bond
240
Amortizing a bond discount:
allocates a portion of the total discount to interest expense each interest period
241
A discount on bonds payable:
occurs when a company issues bonds with a contract rate less than the market rate
242
If an issuer sells bonds at a premium:
the carrying value DECREASES from the issue price to the par value over the bond's term
243
A company received cash proceeds of $206,948 on a bond issue with a par value of $200,000. The difference between par value and issue price for this bond is recorded as a:
credit to premium on bonds payable
244
The following are true about the corporate form of organization:
* A corporation is an entity created by law
* Corporations exist separately from the owners
* A corporation has rights and privileges
* A corporation can be privately held
245
The following are advantages of a corporation:
* Separate legal entity
* Transferable ownership rights
* Continuous life
* No mutual agency for stockholders
246
The following are disadvantages of a corporation:
* Governmental regulation
* Corporate taxation
* Being subject to the same property and payroll taxes as proprietorships
* Double taxation
247
Rights of stockholders include:
* The ability to sell or otherwise dispose of their stock
* The ability to vote at stockholders’ meetings
* The ability to receive dividends if declared
* The ability to share in any assets remaining after creditors are paid in a liquidation
248
market value per share is:
the price at which a stock is bought and sold
249
the board of directors of a corporation:
is responsible for overseeing corporate activities
250
the number of shares that a corporation’s charter allows it to sell is referred to as:
authorized stock
251
Par value of a stock refers to the:
amount assigned per share by the corporation in its charter
252
When all authorized shares of a corporation’s stock have the same rights and characteristics, the stock is called:
common stock
253
The total amount of cash and other assets that a corporation receives from its stockholders in exchange for its stock is:
referred to as paid-in capital
254
retained earnings:
is the cumulative net income (and loss) not distributed as dividends to its stockholders
255
Prior period adjustments to financial statements can result from:
material math errors
256
Prior period adjustments are reported in the:
statement of retained earnings
257
The distribution of additional shares to stockholders according to their percent ownership is known as a:
stock split
258
Stocks that pay large cash dividends on a regular basis are called:
income stocks
259
Stocks that pay little or no cash dividends but are attractive to investors because of expected stock price increases are known as:
growth stocks
260
a premium on stock:
occurs when a corporation sells its stock for more than par or stated value
261
The date the directors vote to declare and pay a dividend is called the:
date of declaration
262
The date for identifying the stockholders to receive dividends is called the:
date of record
263
A liability for cash dividends is recorded:
on the date of declaration
264
A corporation's distribution of additional shares of its own stock to its stockholders without any payment in return is called a:
stock dividend
265
A dividend preference for preferred stock means that:
preferred stockholders are paid their dividends before any dividends are paid to common stockholders
266
Stock shares that are reacquired by the issuing corporation are called:
treasury stock
267
Treasury stock is classified as:
a contra equity account
268
Reasons that a company buys back its own stock:
* To avoid a takeover of the company.
* To have shares available to acquire another company.
* To give it to employees as compensation.
* To maintain a strong market for their stock.
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The following statements regarding Treasury Stock are true:
* Corporations do not record gains or losses on transactions involving their own stock.
* Purchasing Treasury Stock reduces the corporation’s assets and equity by equal amounts.
******Dr. Treasury Stock, Cr. Cash
* Treasury Stock is presented on the balance sheet as a contra equity account.
* Treasury Stock does not have voting rights.
270
