Which term describes stock that has been authorized for issuance but not necessarily issued yet?

• 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 defined in its charter. It represents the total pool that could be issued in the future, not necessarily shares that have already been sold. Issued stock refers to shares that have actually been sold to investors; outstanding stock is the portion of issued shares currently held by investors (issued minus any treasury shares); treasury stock consists of shares the company previously issued but later repurchased and held in the company’s treasury. So, describing stock that has been authorized for issuance but not yet issued fits authorized stock because it denotes the potential supply, not the actual issuance or ownership.