Stock of a company that has been issued, fully paid for and subsequently reacquired by the company is known as:

Question

Options

• Acapital stock
• Btreasury stock
• Cexchange stock
• DGain stock

• A
  9% (4)
• B
  73% (32)
• C
  14% (6)
• D
  5% (2)

Explanation

Treasury stock (B) refers to shares that a corporation originally issued and sold, were fully paid for by shareholders, and were later repurchased (reacquired) by the company itself. These shares are held by the company and do not pay dividends, carry no voting rights, and are not counted as outstanding shares.

Why the distractors are wrong:

• A. Capital stock is the total authorized shares a company can issue - it's a broader category that includes both common and preferred stock, not specifically repurchased shares.
• C. Exchange stock is not a standard accounting or finance term; it's a fabricated distractor.
• D. Gain stock is also not a recognized term in corporate finance or accounting.

Memory tip: Think of treasury as the company's own "vault" - the company paid money back into its treasury to buy back those shares, so they now sit locked up in the corporate treasury rather than circulating in the market.

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