outstanding vs. issued shares


A

AccountingNut

Ok, beginning accounting question. I'm taking a beginning accounting
class and this is confusing me.

I understand that a corporation can have "authorized" shares (those
set forth in the charter), "issued" shares (available for sale to
investors), and "outstanding" shares (those shares currently held by
investors). My question is this: What if you have 10,000 shares
issued, but not all the shares are sold. Can shares be "issued" and
not sold yet? Or...when the shares are "issued" are they assumed to be
"sold" especially when an underwriter (broker) is involved? My
thinking is that the corporation "sells" the shares to the broker
(therefore, immediately receiving the capital) and then the broker
bears the risk of selling the shares. In any event, the shares can
then be considered "issued AND outstanding". Am I barking up the right
tree here?

I know treasury stock purchases reduce the amount "outstanding" which
can cause a difference in the "issued" numbers of shares and the
"outstanding" shares. But I'm looking for something that causes a
difference in the numbers that is NOT the situation with treasury
stock.

Thanks.
 
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Z

Zergrinch

Ok, beginning accounting question. I'm taking a beginning accounting
class and this is confusing me.

I understand that a corporation can have "authorized" shares (those
set forth in the charter), "issued" shares (available for sale to
investors), and "outstanding" shares (those shares currently held by
investors). My question is this: What if you have 10,000 shares
issued, but not all the shares are sold. Can shares be "issued" and
not sold yet? Or...when the shares are "issued" are they assumed to be
"sold" especially when an underwriter (broker) is involved? My
thinking is that the corporation "sells" the shares to the broker
(therefore, immediately receiving the capital) and then the broker
bears the risk of selling the shares. In any event, the shares can
then be considered "issued AND outstanding". Am I barking up the right
tree here?
You're not. While shares can be assumed "sold" (but unpaid), like
Subscribed Stock, they are not "issued" until full payment has been
effected.
I know treasury stock purchases reduce the amount "outstanding" which
can cause a difference in the "issued" numbers of shares and the
"outstanding" shares. But I'm looking for something that causes a
difference in the numbers that is NOT the situation with treasury
stock.
To my knowledge, ONLY treasury stock purchases cause the difference
between "issued" and "outstanding" shares. There are no other situations
I can think of that cause a difference in the numbers, which is not
caused by stocks held in treasury.
 
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Joined
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You're not. While shares can be assumed "sold" (but unpaid), like
Subscribed Stock, they are not "issued" until full payment has been
effected.
Oh I've thought so far that only outstanding shares are sold stocks. Thank you.
 

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