What does "unissued stock" refer to?

Unissued stock refers to shares that a corporation has authorized but has not yet sold or distributed to shareholders. This can happen for several reasons, such as the company retaining shares for future use, like raising capital or employee compensation plans. By having a reserve of unissued stock, a company maintains flexibility in its financial planning and strategy.

The other options do not accurately capture the definition of unissued stock. The number of shares currently held by the public pertains to outstanding stock, which is the opposite of unissued stock. The current price of a share refers to market valuation and does not concern the number of shares issued or unissued. Meanwhile, calculating the net worth of the company divided by outstanding shares pertains to determining earnings per share, which again, does not involve unissued stock. Understanding these distinctions helps clarify the concept and its relevance in financial audits and corporate finance.