Shares Repurchases: effect on equity

CFA Level I Equities
#1

Hello everyone!

I have a question about when a company repurchases its stock:

When a company does it, it is clear to see that on the Balance Sheet, the cash will be reduced, but why does the equity will also be reduced?
I mean, those shares will continue to exist or what happens here?

Thanks in advance!

#2

They increase Treasury Stock, a contra-equity account.

They continue to exist, but they’re no longer outstanding.

#3

Ooh, it makes sense now!
So if a company has not repurchased any stock, this contra-equity account would not exist?

#4

That’s correct.

#5

thanks a lot S2000magician !

#6

My pleasure.