The purchase of treasury stock has the same effect on stockholders' equity as issuing stock.

Question

Quizplus · Accepted Answer

The purchase of treasury stock actually decreases stockholders' equity, as the company is buying back its own shares, which reduces the amount of outstanding shares and therefore reduces the overall value of the company. Issuing stock, on the other hand, increases stockholders' equity as it brings in additional funds to the company.

The Purchase of Treasury Stock Has the Same Effect on Stockholders