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page 10-1 of the VLN, what is the difference between issued shares and outstanding shares? A. Authorized shares. B. Unissued share. C. Treasury shares. D. There is no difference between issued shares and outstanding shares

page 10-1 of the VLN, what is the difference between issued shares and outstanding shares? A. Authorized shares. B. Unissued share. C. Treasury shares. D. There is no difference between issued shares and outstanding shares

Essentials Of Investments
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
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From page 10-1 of the VLN, what is the difference between issued shares and outstanding shares? A. Authorized shares. B. Unissued share. C. Treasury shares. D. There is no difference between issued shares and outstanding shares.
Treasury Stock: PREFERRED STOCK -Not normally voting -Preference in dividends -Fixed dividend rate (% of par or specified amount) -Cumulative (dividends in arrears) -Convertible -Redeemable -Mandatory Redeemable preferred stock is treated as debt on the balance sheet Par value or Stated value -legal capital -not market value Paid-In Capital -Preferred stock (PAR Value x number of shares ISSUED) -Common Stock (PAR VALUE x number of shares ISSUED) - Additional Paid-in Capital “APIC" or Capital in excess of Par No-par Stock Paid in capital all goes into common stock Practice A firm issues 50,000 shares of $0.10 par common stock for $10 per share, record the issuance. A firm issues 50,000 shares of $100 par preferred stock for $110 per share, record the issuance. A firm issues 50,000 shares of no par common stock for $10 per share, record the issuance. TREASURY STOCK -Contra Equity (reduces SEà does NOT reduce common stock) -Issued but NOT outstanding -Recorded at COST -No voting rights -No dividend or distribution rights Economic Gain on sale of Treasury Stock (Resold for more than cost) -not shown as a GAIN -increase Additional paid in capital Economic Loss on sale of Treasury Stock (Resold for less than cost) -not shown as a LOSS -decrease Additional paid in capital if available, or, if not available -decrease Retained Earnings
Transcribed Image Text:Treasury Stock: PREFERRED STOCK -Not normally voting -Preference in dividends -Fixed dividend rate (% of par or specified amount) -Cumulative (dividends in arrears) -Convertible -Redeemable -Mandatory Redeemable preferred stock is treated as debt on the balance sheet Par value or Stated value -legal capital -not market value Paid-In Capital -Preferred stock (PAR Value x number of shares ISSUED) -Common Stock (PAR VALUE x number of shares ISSUED) - Additional Paid-in Capital “APIC" or Capital in excess of Par No-par Stock Paid in capital all goes into common stock Practice A firm issues 50,000 shares of $0.10 par common stock for $10 per share, record the issuance. A firm issues 50,000 shares of $100 par preferred stock for $110 per share, record the issuance. A firm issues 50,000 shares of no par common stock for $10 per share, record the issuance. TREASURY STOCK -Contra Equity (reduces SEà does NOT reduce common stock) -Issued but NOT outstanding -Recorded at COST -No voting rights -No dividend or distribution rights Economic Gain on sale of Treasury Stock (Resold for more than cost) -not shown as a GAIN -increase Additional paid in capital Economic Loss on sale of Treasury Stock (Resold for less than cost) -not shown as a LOSS -decrease Additional paid in capital if available, or, if not available -decrease Retained Earnings
OWNERSHIP OF A CORPORATION Overview of Stockholders' Equity -Source of financing (A= L+ SE) -Ownership of the corporation (A-L=SE) Stockholders' Equity on the Balance Sheet Paid-in Capital + Retained Earnings – Treasury stock PART A: Invested Capital (Paid-in Capital) Invested capital is the amount of resources contributed to a company by its owners. Corporations StockholdersàBoard of DirectorsàCEO Initial Public Offering (IPO) STOCKHOLDER RIGHTS: to vote, receive dividends, and share in the distribution of assets ADVANTAGES of a CORPORATION -limited liability -ability to raise capital and transfer ownership DISADVANTAGES of a CORPORATION -double taxation -SEC regulation requirements STOCK (Common Stock and Preferred Stock) Number of Shares Authorized Shares: Issued Shares: Outstanding Shares: Unissued Shares: Treasury Stock:
Transcribed Image Text:OWNERSHIP OF A CORPORATION Overview of Stockholders' Equity -Source of financing (A= L+ SE) -Ownership of the corporation (A-L=SE) Stockholders' Equity on the Balance Sheet Paid-in Capital + Retained Earnings – Treasury stock PART A: Invested Capital (Paid-in Capital) Invested capital is the amount of resources contributed to a company by its owners. Corporations StockholdersàBoard of DirectorsàCEO Initial Public Offering (IPO) STOCKHOLDER RIGHTS: to vote, receive dividends, and share in the distribution of assets ADVANTAGES of a CORPORATION -limited liability -ability to raise capital and transfer ownership DISADVANTAGES of a CORPORATION -double taxation -SEC regulation requirements STOCK (Common Stock and Preferred Stock) Number of Shares Authorized Shares: Issued Shares: Outstanding Shares: Unissued Shares: Treasury Stock:
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