Question

multiple choice question

treasury stock is reported in the ______.

• liability section of the balance sheet
• operating section of the income statement
• contra-asset section of the balance sheet
• financing section of the income statement
• stockholders equity section of the balance sheet

Explanation:

Identify the nature of treasury stock

Treasury stock represents a corporation's own stock that has been issued and subsequently reacquired by the company but not retired. It is a contra-equity account, which reduces total stockholders' equity.

Locate treasury stock on financial statements

Because treasury stock reduces total stockholders' equity, it is reported as a deduction within the stockholders' equity section of the balance sheet, rather than as an asset, liability, or income statement item.

Answer:

• liability section of the balance sheet
• operating section of the income statement
• contra-asset section of the balance sheet
• financing section of the income statement
• stockholders' equity section of the balance sheet (Correct answer)