On page 24 (SS#7) of the Schweser FRA book, the third bullet point says that a $10,000 repurchase of stock is a decrease in common stock under Shareholders’ Equity on the balance sheet. Why is this a decrease and not an increase?
Hi. I don’t have any of my materials in front of me. Could it be that the company paid $10,000 to repurchase the stock so that now those shares really don’t exist for circulation/ownership anymore, i.e. they are no longer a part of shareholders’ equity. Just a guess. Rock on.
Hi, A Beaverhausen is right. The company bought back those shares and hence on balance sheet the commmon stock value decreases by $10,000.
okay, that makes sense. I guess that means Treasury Stock (contra account) would increase. Thanks for your help!