Question

The purchase and resale of treasury stock is normally recorded using the a.direct method. b.equity method. c.cost method. d.indirect method.

Answer 1

Answer:

The Correct Answer is c. Cost Method.

Explanation:

Treasury stock defines as the stock which is reacquired by the issuing company from the stockholder. This strategy reduces the outstanding stocks in the open market. There are two methods to record this transaction, par value or cost method.  This strategy reduces the total stockholder equity on the company's account and therefore treasury stocks are referred to as contra equity account.