Which of the following is/are true about Treasury stock?
I. They represent registered shares that have been reacquired from shareholders.
II. Ownership of treasury stock represents part of a firm's assets.
III. Purchase of treasury stock reduces both assets and equity.
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A. B. C. D.D
Treasury stock represents the equity that has been repurchased by the company. It should be remembered that treasury stock is not an asset; rather it is a contra equity account, serving to reduce the outstanding equity. A compensating reduction in assets also occurs when the firm has to pay cash to buy-back the shares.