The recording of the purchase of treasury stock will cause total stockholders' equity to decrease by the amount of the cost of the treasury stock.

Question

Quizplus · Accepted Answer

When treasury stock is purchased, it is recorded as a reduction in total stockholders' equity by the same amount as the cost of the stock. This is because treasury stock represents shares that were previously issued and outstanding and are now held by the company. As a result, these shares no longer represent ownership in the company and should not be included in the calculation of total stockholders' equity.

The Recording of the Purchase of Treasury Stock Will Cause