Treasury stock is a corporation's previously issued shares of stock which have been repurchased from the stockholders and the corporation has not retired the repurchased shares. The number of shares of treasury stock (or treasury shares) is the difference between the number of shares issued and the number of shares outstanding. Since the treasury shares result in fewer shares outstanding, there may be a slight increase in the corporation's earnings per share.

Treasury Stock is also the title of a general ledger account that will typically have a debit balance equal to the cost of the repurchased shares being held by the corporation. (Some corporations use the par value method instead.) The cost of the treasury stock purchased with cash will reduce the corporation's cash and the amount of its total stockholders' equity.

The shares of treasury stock will not receive dividends, will not have voting rights, and cannot result in an income statement gain or loss. The shares of treasury stock can be sold, retired, or could continue to be held as treasury stock.

Learn Accounting: Gain unlimited access to our seminar videos, flashcards, visual tutorials, exams, business forms, and more when you upgrade to PRO.