Which of the following is true of outstanding shares?
A) A firm cannot sell more shares than the outstanding shares mentioned in the charter.
B) Authorized shares become outstanding shares when they are issued or sold to investors.
C) Outstanding shares are indicated in a firm's corporate charter.
D) Outstanding shares are the shares repurchased by the firm.

Question

Quizplus · Accepted Answer

Outstanding shares are the shares of a company that have been issued and are currently held by investors. Authorized shares refer to the maximum number of shares that a company is legally allowed to issue. When authorized shares are sold or issued to investors, they become outstanding shares. Option A is incorrect because a company can sell more shares by amending its charter to increase the number of authorized shares. Option C is incorrect because the number of outstanding shares can change over time due to factors such as stock issuances, buybacks, and mergers. Option D is incorrect because repurchased shares are generally considered to be treasury shares and are not counted as outstanding shares.

Which of the Following Is True of Outstanding Shares