What Is the Oakes Test and How Is It Employed

question 102

Essay

What is the Oakes test and how is it employed?

---

Definitions:

Treasury Stock

Shares that were once a part of the outstanding shares but were bought back by the issuing company, reducing the amount of outstanding stock on the open market.

Paid-In Capital

The total amount of money or value of property that shareholders have contributed to a company in exchange for shares, excluding earnings retained by the company.

Journalize

The process of recording transactions in a journal before they are posted to ledger accounts.

Paid-In Capital

Funds raised by a company through the issuance of securities, reflecting the total amount of invested capital that shareholders have contributed directly.