(L.O. 2) Treasury stock is classified as a(n):

a. current asset.

b. long-term investment.

c. other asset.

d. contra stockholders’ equity item.

Explanation: Treasury stock is a company’s own stock that has been issued, reacquired by the corporation, but not canceled. The acquisition of treasury stock represents a contraction of owners’

equity; thus it is reported as a reduction of stockholders’ equity. (Solution = d.)