Table of contents

1. Introduction to Accounting1h 21m
2. Transaction Analysis1h 13m
3. Accrual Accounting Concepts2h 38m
4. Merchandising Operations2h 30m
5. Inventory1h 55m
6. Internal Controls and Reporting Cash1h 16m
7. Receivables and Investments3h 8m
8. Long Lived Assets5h 1m
9. Current Liabilities2h 19m
10. Time Value of Money1h 23m
- Time Value of Money Equations
  35m
- Using Time Value of Money Tables
  47m
11. Long Term Liabilities2h 45m
12. Stockholders' Equity2h 15m
13. Statement of Cash Flows2h 24m
14. Financial Statement Analysis5h 25m
15. GAAP vs IFRS56m

12. Stockholders' Equity

Treasury Stock

Financial Accounting

12. Stockholders' Equity

Treasury Stock

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Multiple Choice

Which of the following statements about treasury stock is correct?

Treasury stock increases the number of shares outstanding.

Treasury stock is a corporation's own stock that has been reacquired and is held in the company's treasury.

Dividends are paid on treasury stock.

Treasury stock is considered an asset on the balance sheet.

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Verified step by step guidance

Understand the concept of treasury stock: Treasury stock refers to shares that a corporation has issued and subsequently reacquired. These shares are held in the company's treasury and are not considered outstanding shares.

Clarify the impact of treasury stock on shares outstanding: When a company reacquires its own stock, the number of shares outstanding decreases because these shares are no longer available to the public or investors.

Determine whether dividends are paid on treasury stock: Dividends are not paid on treasury stock because these shares are not considered outstanding and do not participate in earnings distributions.

Evaluate whether treasury stock is an asset: Treasury stock is not considered an asset on the balance sheet. Instead, it is recorded as a contra-equity account, reducing total stockholders' equity.

Identify the correct statement: Based on the analysis, the correct statement is that treasury stock is a corporation's own stock that has been reacquired and is held in the company's treasury.