What best describes treasury stock in corporate accounting?

• A. Company's own shares repurchased that reduce equity
• B. Issued shares held by public
• C. Shares outstanding with voting rights
• D. Deferred tax assets

Answer: (A)

Treasury stock is the company’s own shares that it has repurchased and now holds in its treasury. These shares were previously issued to investors, but because the company owns them, they are not considered outstanding and they do not carry voting rights or receive dividends while held in treasury. On the balance sheet, treasury stock is a contra-equity item with a debit balance, which reduces total shareholders’ equity. If the company later reissues these shares, equity is adjusted accordingly.

The other options describe things that aren’t treasury stock: issued shares held by the public are the outstanding shares that are traded and owned by outside investors; shares outstanding with voting rights are active, not treasury; and a deferred tax asset is a separate tax-related asset, not related to treasury stock.