A company has 50,000 issued shares and 5,000 shares in treasury stock. What is the role of treasury stock in determining the number of outstanding shares?

• A. Treasury stock has no effect on the number of outstanding shares.
• B. Treasury stock increases the number of outstanding shares by the number of shares repurchased.
• C. Treasury stock reduces the number of outstanding shares by the number of shares repurchased.
• D. Treasury stock is included in the calculation of issued shares but not outstanding shares.

Answer: (C)