Treasury stock decreases total stockholders' equity.

Question

Quizplus · Accepted Answer

Treasury stock represents shares of a company's stock that have been repurchased from the open market or other shareholders. When a company holds treasury stock, it does not count as outstanding shares, which decreases the total number of shares issued by the company. As a result, total stockholders' equity (which is the sum of the company's assets minus its liabilities and preferred equity) decreases as well. Therefore, the statement "Treasury stock decreases total stockholders' equity" is true.

Treasury Stock Decreases Total Stockholders' Equity