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 these

Question

Quizplus · Accepted Answer

When a company buys back its own shares, it reduces the number of shares outstanding. This will affect the following balance sheet accounts:* Retained earnings: The company will need to use retained earnings to purchase the shares. This will reduce the amount of retained earnings available to the company.* Additional paid-in capital: The company will need to use additional paid-in capital to purchase the shares. This will reduce the amount of additional paid-in capital available to the company.* Treasury shares at cost: The company will record the cost of the shares it purchases as treasury shares at cost. This will increase the amount of treasury shares at cost on the balance sheet.

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