In order of quantity, which is the smallest to largest stock classification?

The sequence from smallest to largest in terms of stock classifications is informed by their definitions and the context of corporate finance.

Authorized stock represents the total number of shares that a company is allowed to issue as indicated in its articles of incorporation. This number can be significantly higher than the actual shares available to investors, as it includes any shares that have not yet been issued.

Issued stock refers to the shares that have actually been sold or distributed to shareholders. This includes both shares that are currently held by shareholders and those held by the company as treasury stock.

Outstanding stock consists of shares that are currently held by shareholders, excluding any treasury stock. These are the shares that are actively traded on the market and influence ownership and earnings per share.

When you look at these definitions, authorized stock is the largest category since it encompasses all potential shares of the company. Issued stock is next in line because it is the actual shares distributed from the authorized amount. Finally, outstanding stock, while being part of issued stock, is often less than or equal to the issued stock since it accounts only for shares currently held by shareholders.

This logical classification demonstrates the hierarchy of stock classifications based on quantity, leading to the correct answer which shows outstanding stock as the smallest, followed by issued