Claudia has actually made it to the final week of her accounting class! However, her brain is going on strike and she is desperately ready for a break! The only thing in worse shape than her mind is her poor accounting book which has been punched, torn, and thrown across the room countless times. Now she's reviewing Chapter 13 and none of it is making sense to her. Right now you are the only level-headed and calming influence in Claudia's life and she has turned to you to please explain the following: (1) What is treasury stock and what type of account is it? (2) From an accounting standpoint, isn't treasury stock just a regular equity account with a normal credit balance? (3) Why don't corporations pay dividends on shares of treasury stock?
Claudia has actually made it to the final week of her accounting class! However, her brain is going on strike and she is desperately ready for a break! The only thing in worse shape than her mind is her poor accounting book which has been punched, torn, and thrown across the room countless times. Now she's reviewing Chapter 13 and none of it is making sense to her. Right now you are the only level-headed and calming influence in Claudia's life and she has turned to you to please explain the following:
(1) What is
(2) From an accounting standpoint, isn't treasury stock just a regular equity account with a normal credit balance?
(3) Why don't corporations pay dividends on shares of treasury stock?
Trending now
This is a popular solution!
Step by step
Solved in 2 steps
