Which of the following accurately describes treasury stock?

Treasury stock refers to shares that have been repurchased by the issuing company and are held in its own treasury rather than being canceled or retired. This stock is not considered when calculating earnings per share or dividends, as it is essentially taken out of circulation. The company may choose to buy back its own shares for a variety of reasons, including to increase shareholder value, reduce the number of shares outstanding, or to have shares available for employee compensation plans or future acquisitions.

The concept of treasury stock is crucial for understanding corporate finance as it impacts a company's balance sheet and financial ratios. Holding treasury shares can be strategic for a company, as it gives flexibility in managing capital and taking advantage of situations where share prices may be undervalued.