Stock that has been authorized to be issued to the general public is known as which?

• A. Authorized Stock
• B. Issued Stock
• C. Treasury Stock
• D. Outstanding Stock

Answer: (A)

Authorized stock is the maximum number of shares a corporation is allowed to issue as stated in its charter. This sets the ceiling for how many shares may be sold to the public or other investors. It isn’t necessarily all issued at once—only the portion that has actually been sold becomes issued stock. Shares that have been issued but are currently held by investors (excluding any the company has bought back) are outstanding stock, while shares the company has repurchased and holds are treasury stock. So when a question asks for stock that has been authorized to be issued to the general public, the term that fits is authorized stock because it represents the upper limit approved for potential issuance. For example, if there are 1,000,000 shares authorized, 600,000 issued, and 40,000 held as treasury, outstanding shares would be 560,000.