To understand treasury stock you first need one picture. A company's shares are slices of ownership held by outside investors. When the company earns profit, that profit belongs to the slices, so the fewer slices exist, the more each one is worth. This is why companies buy their own shares back: using the company's cash to purchase shares from investors who want to sell shrinks the number of slices, and every remaining shareholder ends up owning a slightly bigger piece of the same business without doing anything.
Picture the coffee shop with ten equal owners. The shop has a strong year and uses its spare cash to buy out one of the ten. Nine owners remain, and each now holds a ninth of the business instead of a tenth. Nobody put in new money, yet everyone's stake grew. That is a buyback in miniature.
Now the accounting question: what happens to the purchased share? The company cannot own a piece of itself in any meaningful way, since a share in its own drawer pays dividends to nobody and votes for nobody. So accounting treats it as dead weight, and the company has two choices.
The first is to hold the shares in reserve, and this is what treasury stock means. They sit in the company's treasury, neither alive as ownership nor formally destroyed. On the balance sheet they appear inside the equity section as a negative number, the money spent buying them, and the line grows more negative as buybacks accumulate. The company keeps them because they might be useful later, for example to hand to employees when stock options are exercised.
The second choice is to retire the shares, formally canceling them out of existence. Retired shares leave no treasury line at all: the share count simply falls and the money spent is absorbed elsewhere in equity. This creates a trap. A company that retires everything it buys back can be returning enormous sums to shareholders while showing no treasury stock whatsoever. Apple is a famous example. So the absence of a treasury line tells you nothing about buybacks. The reliable signal is always the share count itself, which is what the net share change metric tracks.
One judgment completes the picture. A buyback is the company spending shareholders' money to purchase shares, so the price paid matters just as it would for any purchase. Buying back cheap shares concentrates ownership at a bargain and builds value for everyone who stays. Buying back expensive ones means overpaying, using the owners' cash to acquire something worth less than what was spent, and that quietly destroys value even though the announcement sounds shareholder-friendly.