Answered: As of the date of the financial…

Cornerstones of Financial Accounting

4th Edition

ISBN:9781337690881

Author:Jay Rich, Jeff Jones

Publisher:Jay Rich, Jeff Jones

Chapter10: Stockholder's Equity

Section: Chapter Questions

Problem 2MCQ: Which of the following statements is true? The outstanding number of shares is the maximum number of...

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Question

As of the date of the financial statements, the number of common shares issued will exceed the number of shares outstanding as a result of the:

o. purchase of treasury stocks.

b. declaration of a large stock dividend.

c. declaration of a "Stock split" or fractionation of shares.

d. immediate purchase and withdrawal of common shares.

Expert Solution

Step 1

Issued shares are the total shares issued by the company in order to raise funds whereas outstanding shares are the shares which are held by the outsiders, it does not consider treasury stock own by the company.

Whenever a company purchases its own stock, they are to be treated as treasury stock

Outstanding shares can be termed as = Issued shares - Treasury stock

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