Which of the following classifications represents the greatest number of shares of common stock for a corporation?

• A. Issued shares
• B. Treasury shares
• C. Outstanding shares
• D. Authorized shares

Answer: (D)

Verified step by step guidance

1. Understand the definitions of the terms: Authorized shares, Issued shares, Treasury shares, and Outstanding shares. Authorized shares represent the maximum number of shares a corporation is legally allowed to issue as per its corporate charter. Issued shares are the portion of authorized shares that have been sold to investors. Treasury shares are shares that were issued but later repurchased by the company. Outstanding shares are issued shares minus treasury shares.
2. Recognize that authorized shares are the largest category because they represent the total number of shares a corporation can issue, while issued, treasury, and outstanding shares are subsets of this total.
3. Compare the classifications: Issued shares cannot exceed authorized shares, as they are a subset of authorized shares. Treasury shares are a subset of issued shares, and outstanding shares are issued shares minus treasury shares.
4. Conclude that authorized shares represent the greatest number of shares because they include all shares that could potentially be issued, regardless of whether they are currently issued, held as treasury shares, or outstanding.
5. To solidify understanding, visualize the relationship: Authorized shares > Issued shares > Outstanding shares (Issued shares - Treasury shares). This hierarchy helps clarify why authorized shares are the largest classification.