Which of the following balance-sheet accounts will be affected when the company buys back some of its outstanding shares?
A) retained earnings
B) additional paid-in capital
C) treasury shares at cost
D) All of the choices are correct

Question

Quizplus · Accepted Answer

Treasury shares at cost is a contra-equity account that reduces total stockholders' equity. When a company buys back its own shares, the number of shares outstanding decreases, which increases earnings per share. The retained earnings and additional paid-in capital accounts are also affected because the company must use these funds to purchase the shares.

Which of the Following Balance-Sheet Accounts Will Be Affected When