Which term describes stock that the company has issued and subsequently reacquired by the corporation for its own use?

• A. Issued Stock
• B. Treasury Stock
• C. Authorized Stock
• D. Common Stock

Answer: (B)

When a company buys back shares it previously issued, those shares become treasury stock. They were issued to investors, but the corporation now holds them in its own treasury for its use. Treasury stock is a contra-equity position, reducing total shareholders’ equity, and these shares are not considered outstanding, so they typically don’t have voting rights and don’t receive dividends while in treasury. The company can later reissue treasury stock if needed, such as for employee compensation plans or to raise additional capital. This differs from issued stock, which simply means shares that have been sold to investors; authorized stock is the maximum number the charter allows; and common stock is a type of equity ownership.