If a corporation is authorized to issue 1,000 shares of $5 common stock, it is said to have $5,000 of stock outstanding.

Question

Quizplus · Accepted Answer

The statement is incorrect. The authorized number of shares and the outstanding number of shares are not the same. The authorized number of shares represents the maximum number of shares that the corporation can issue, while the outstanding number of shares represents the actual number of shares that have been issued and are owned by shareholders. So, if the corporation has issued and sold only 500 shares of $5 common stock, it would have $2,500 of stock outstanding, not $5,000.

If a Corporation Is Authorized to Issue 1,000 Shares of $5