Which term describes stock that has been issued and subsequently reacquired by the corporation?

• A. Common Stock
• B. Treasury Stock
• C. Authorized Stock
• D. Par Value

Answer: (B)

When a company buys back its own shares, those shares become treasury stock. They were issued to investors, later reacquired by the corporation and held in its treasury. While in this status, they usually reduce the number of shares outstanding and sit as a contra-equity balance, since the company owns the shares rather than external shareholders. Treasury stock can be reissued later or retired, but it does not carry voting rights or receive dividends while it’s held in the treasury. This distinguishes it from common stock, which represents ownership and voting rights, from authorized stock, which is simply the maximum number of shares the charter allows the company to issue, and from par value, which is the nominal value assigned to each share and not related to whether the shares have been reacquired.