Which of the following statements regarding treasury stock is CORRECT?
A)Treasury Stock is reported beneath the Retained Earnings account on the balance sheet as a positive amount.
B)If the amounts received from resale of treasury stock are less than amounts originally paid,the difference is shown on the income statement as a loss on treasury stock transactions.
C)Treasury stock is recorded as an asset at the stock's market value on the date of purchase.
D)Repurchasing treasury stock provides a way for public companies to return cash to shareholders other than through dividends.

Question

Quizplus · Accepted Answer

Repurchasing treasury stock provides a way for public companies to return cash to shareholders other than through dividends.

A, B, and C are incorrect statements. Treasury Stock is reported as a negative amount on the balance sheet beneath the Retained Earnings account. Any difference between the amounts received from resale and the amounts originally paid for treasury stock is shown as a gain or loss on the income statement. Lastly, treasury stock is recorded at cost, not at the stock's market value on the date of purchase.

Which of the Following Statements Regarding Treasury Stock Is CORRECT