Question

Treasury stock should be reported in the financial statements of a corporation as a(n)a. investment.b. liability.c. deduction from total paid-in capital.d. deduction from total paid-in capital and retained earnings.

Answer 1

Answer:

D

Explanation:

Treasury stocks are shares reacquired by the corporation.

It is a contra account for stockholder's equity, which shows a debit balance in the general ledger.

Treasury stock is the difference between the number of shares issued and number of shares outstanding.

Answer 2

Answer:

The correct answer is letter "D": deduction from total paid-in capital and retained earnings.

Explanation:

Treasury stock is a company's own stock that is held in its treasury for later use. Often a company purchases its treasury stock on the open market. Treasury stock may also exist because the issuing company did not sell all of its outstanding shares. Treasury stock is reported in the stockholder's equity section of the balance sheet or with the deduction from total paid-in capital and retained earnings.