Which statement best describes authorized capital stock?

Authorized capital stock refers to the maximum amount of shares that a corporation is permitted to issue as stated in its articles of incorporation. This figure is established during the formation of the corporation and represents the total number of shares that can potentially be sold to stockholders.

When the articles of incorporation outline this amount, it provides a legal framework for how many shares can be authorized for issuance, although this amount may not all be issued immediately. Stockholders have the right to subscribe to these shares, which gives them the opportunity to invest in the corporation and benefit from its growth.

Contrarily, the other statements do not accurately represent the concept of authorized capital stock. For example, the first option refers to the agreed payment for shares, which pertains more to the price or value of stock rather than the concept of authorized capital itself. The third option incorrectly narrows the definition to only include treasury shares, which are repurchased shares held by the corporation and do not represent the total authorized share amount. Lastly, the fourth option describes issued and paid capital stock, rather than the total amount authorized for potential issuance. Hence, option B stands out as the accurate description of authorized capital stock.