outstanding vs. issued shares

Discussion in 'Accounting' started by AccountingNut, Oct 6, 2004.

  1. 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.
     
    AccountingNut, Oct 6, 2004
    #1
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  2. AccountingNut

    Zergrinch Guest

    > 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.
     
    Zergrinch, Oct 9, 2004
    #2
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  3. AccountingNut

    straightmarble02

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    Oh I've thought so far that only outstanding shares are sold stocks. Thank you.
     
    straightmarble02, Jul 28, 2015
    #3
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