Issued share capital less the par value of shares that are held in the company's treasury?

Issued share capital less the par value of shares that are held in the company's treasury?

• A. Inventory
• B. Authorised share capital
• C. Outstanding share capital
• D. Contributed surplus

Answer: (C)

Outsanding share capital represents the portion of issued shares that remains with external investors after the company buys back some shares as treasury stock. When shares are issued, their par value adds to issued share capital. If the company later holds some of those issued shares in treasury, those par values are subtracted to reflect only what is currently held by outside shareholders. So, issued share capital minus the par value of treasury shares equals outstanding share capital. For example, if issued share capital is 1,000 dollars and 200 dollars of that par value is held in treasury, the outstanding share capital is 800 dollars. The other terms refer to different concepts: inventory is a current asset, authorised share capital is the maximum amount the company is allowed to issue, and contributed surplus (additional paid-in capital) relates to amounts paid over par value, not to the adjustment for treasury shares.

Outsanding share capital represents the portion of issued shares that remains with external investors after the company buys back some shares as treasury stock. When shares are issued, their par value adds to issued share capital. If the company later holds some of those issued shares in treasury, those par values are subtracted to reflect only what is currently held by outside shareholders.

So, issued share capital minus the par value of treasury shares equals outstanding share capital. For example, if issued share capital is 1,000 dollars and 200 dollars of that par value is held in treasury, the outstanding share capital is 800 dollars.

The other terms refer to different concepts: inventory is a current asset, authorised share capital is the maximum amount the company is allowed to issue, and contributed surplus (additional paid-in capital) relates to amounts paid over par value, not to the adjustment for treasury shares.