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Can anyone explain the meaning or significance of the following terms? Authorized Shares of Stock Issued...

Can anyone explain the meaning or significance of the following terms?

Authorized Shares of Stock

Issued Shares of Stock

Outstanding Shares of Stock

Treasury Stock

Solutions

Expert Solution

a)AUTHORISED SHARES OF STOCK :A company estimates its maximum capital requirements. This amount of capital is mentioned in capital clause of the memorandum of asociation registered. It puts a limit on the amount of captial which a company is authorised to raise during its lifetime.

so the maximum stock the company can issuse is authorised stock it cannot issuse more stock then that but it can be increased by the shareholders at any time if the majority shareholders votes in favour of the change

ex: if authorised share stock is $100000 a company cannot issuse shares above that.if they want to issuse more first alter or increase the authorised capital by the vote of majority of shareholders

ISSUSED SHARES OF STOCK A company need not issuse total authorised shares whenver the portion of share shares is issused by the company is called issused stock. issused capital means and inculdes the nominal value of shares by the company for cash and consideration other than cash to .

the remaining capital stock of the authorised stock which is not issused can be termed as un issued stock it is not shown in balance sheet

OUSTANDING SHARES OF STOCK Refers to all the shares currently held by the shareholders, directors and investors in the public domain but does not inculdes the shares repurchased by tha companyso issused and not reacquired by the company

ex if the company has issused shares of stock is 1000 and 100 stock is reacquired by the company then outstanding stock is 900 if nothing ie reacquired then outstanding is 1000 so outstanding is always less then issused stock

TREASURY STOCK if a company reacquires shares of own stock and does not retire them then that stock is called treasury stock of that company . it reduces the outstanding stock it is the difference between shares issused and outstanding stock if shares issused is 1000 and oustanding stock is 900 then treasury stock is 100 it reduces the amount of stock in open market

it is ment for retirement or disposition or resle to public .sometime it is termed as tax efficient method to put a cash directly into shareholders hand.

ekkarill92 answered 1 year ago
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