Final answer:
Treasury stock is shown as a decrease in stockholders' equity, reducing the net worth of the company within the equity portion of a balance sheet.
Step-by-step explanation:
Treasury stock is recorded as c) a decrease in stockholders’ equity. When a company repurchases its own shares, these shares become treasury stock and are not considered assets. Instead, they are essentially a reduction from issued and outstanding shares and are often accounted for as a contra equity account, which means they lower total stockholders' equity. Treasury stock can be later reissued or retired. In the context of a T-account, which is used to represent the financial position of a company, the purchase of treasury stock would be reflected on the right side, decreasing total equity because assets and liabilities would not be directly affected. The key takeaway is that treasury stock represents the amount paid by the company to reacquire shares of its own stock and thus reduces stockholders' equity.