Treasury stock is a contra-equity account and carries a debit balance.

Question

Quizplus · Accepted Answer

Treasury stock is considered a contra-equity account because it reduces the amount of outstanding shares of a company, which in turn decreases the overall equity of the company. As a contra-equity account, treasury stock carries a debit balance, meaning it is subtracted from the total equity on the balance sheet. Therefore, the statement "Treasury stock is a contra-equity account and carries a debit balance" is true.

Treasury Stock Is a Contra-Equity Account and Carries a Debit