Question

Question: Explain each of the following terms: authorized ordinary shares, unissued ordinary shares, issued ordinary shares, outstanding ordinary shares, and treasury shares.

Short answer

Answer

Authorized ordinary shares, unissued ordinary shares, issued ordinary shares, outstanding ordinary shares, and treasury shares all are part of Shareholders’ equity used to determine the total net worth of the company.

Step-by-step solution

Meaning of Authorized Shares

Authorized shares are the overall number of shares that an enterprise is legitimately permitted to issue, as expressed in its articles of incorporation. The number of exceptional offers cannot surpass the number of authorized offers

Meaning of Unissued Ordinary Shares

Unissued stock is offered in a company that has been authorized for utilizing, but which has never been issued. These offers cannot be utilized to cast votes in shareholder decisions, nor are they entitled to get profits.

Meaning of Issued Ordinary Shares

Ordinary are shares in a company that is owned by individuals who have a right to vote at the company's meetings and to get a portion of the company's benefits after the holders of preference offers have been paid.

 Step 4: Meaning of Outstanding Shares

Outstanding shares are the shares accessible with the shareholders of the company at the given point of time after excluding the shares which are bought back by the company and it has appeared as the portion of the owner’s equity within the liability side of the balance sheet of the company.

Meaning of Treasury Shares

Treasury Stock represents offers that were issued and exchanged within the open markets but are afterward reacquired by the company to diminish the number of offers in public circulation.