Outstanding

Definition§

Outstanding§

“Outstanding” is a multi-faceted term with several definitions based on its application in different financial contexts:

1. Accounts Receivable: Refers to unpaid debts and obligations that are yet to be settled. These are amounts due from customers or clients that have purchased goods or services on credit.

2. Checks or Drafts: Denotes checks or drafts that have not yet been presented for payment. These are usually checks that have been written and mailed but not yet cashed by the recipient.

3. Stock: In corporate finance, it refers to shares held by shareholders that appear under the heading of ‘capital stock’ on corporate balance sheets. This is often detailed as “issued and outstanding stock.”

Examples§

1. Accounts Receivable: A company with $50,000 worth of products sold on credit will list this amount as outstanding accounts receivable until payment is received.
2. Checks: If a person writes a check for rent payment on the 1st of the month, and the landlord cashes it on the 7th, the check is considered outstanding from the 1st to the 7th.
3. Issued and Outstanding Stock: If a company issues 1,000,000 shares and 900,000 of those shares are held by investors, then 900,000 shares are considered issued and outstanding.

Frequently Asked Questions (FAQs)§

Q1: How does outstanding accounts receivable impact a business?

• A1: Outstanding accounts receivable represent potential cash inflows but can impact liquidity. Managing these effectively is crucial for maintaining cash flow.

Q2: What does ‘outstanding checks’ mean for personal finance?

• A2: Outstanding checks are checks that have been written and recorded in the ledger but have not yet been cashed or cleared by the bank.

Q3: How is ‘issued and outstanding’ stock different from ‘authorized’ stock?

• A3: ‘Authorized’ stock is the total number of shares a company can issue, as approved by shareholders. ‘Issued and outstanding’ shares are those that have been sold to and held by shareholders.

Related Terms§

• Accounts Receivable: Money owed to a company by its debtors.
• Draft (Banking): A written order for payment of a specific sum.
• Capital Stock: Shares of ownership in a corporation, both issued and unissued.
• Authorized Stock: Maximum number of shares a company is authorized to issue by its corporate charter.

Online References and Resources§

• Investopedia on Accounts Receivable
• Investopedia on Outstanding Checks
• Investopedia on Capital Stock

Suggested Books for Further Studies§

1. “Finance for Nonfinancial Managers, Second Edition” by Gene Siciliano

   • A practical guide to understanding and applying financial concepts for managers.

2. “Accounting Made Simple: Accounting Explained in 100 Pages or Less” by Mike Piper

   • A straightforward book for those new to accounting principles.

3. “Financial Accounting” by Robert Libby, Patricia Libby, and Frank Hodge

   • Comprehensive textbook covering the essentials of financial accounting.

Fundamentals of Outstanding: Accounting Basics Quiz§

Thank you for diving into the complexities of outstanding obligations and securities. Understanding these fundamentals is crucial for mastering accounting and finance principles!