Question

when a corporation buys back its own stock, the stock is reported on the balance sheet as ______.

retained earnings
treasury stock
dividends
preferred stock
common stock

Explanation:

Identify the transaction type

A corporation repurchasing its own previously issued shares from the open market is a share buyback.

Determine the accounting classification

Repurchased shares are held by the corporation and are classified as treasury stock.

Locate on the balance sheet

Treasury stock is reported as a contra-equity account, reducing total stockholders' equity.

Answer:

• Retained Earnings
• Treasury Stock (Correct answer)
• Dividends
• Preferred Stock
• Common Stock