Question

In: Accounting

In our course materials for week three, we delved into Corporations and Stocks. Take a moment...

In our course materials for week three, we delved into Corporations and Stocks. Take a moment and review the concepts Authorized Stocks, Issued Stocks and Outstanding Stocks. Discuss the relevance of each of these and provide an example of each. Feel free to use a "real" company like Apple or Netflix to discuss their stock history and current status.

Solutions

Expert Solution

The Shareholder Equity section of any company do contain three section of the stock whether common stock or preferred stock.

First, the Authorised Stocks, this the present apex stock quantity which a company can offer to anyone. It is determined with the fees paid to the Company securities authority alongwith the quantity shares applied for. Higher the quantity higher the fees. This figure is not added in the amount colume of the balance sheet.

Second, The Issued Stocks, this is the quantity of stock which the company has offered and the same is subscribed by the prospective shareholders. This is the first active quantity of stock on the balance sheet. It is always lower to authorised stocks.

Third, The Outstanding stocks, this is the quantity which is persently issued, subscribed, paid and free of all charges and active. It does not include the locked-in, treasury stocks, etc.

As per the balance sheet of apple inc. for the year 2015, the company has common stock - Authorised - 12600000 numbers, Issued - 5578753 numbers, Outstanding - 5866161 numbers.

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