Accounting Question?
Question:
A- the stated value of common stock issued.
b-preferred stock.
c-retained earnings.
d- paid-in capital in excess of par value.
Par value
A-is established for a share of stock after it is issued.
b-is the legal capital established for a share of stock.
c-represents what a share of stock is worth.
d-represents the original selling price for a share of stock
The Paid-in Capital in Excess of Par Value account normally arises in the accounting records when
A-the number of shares issued exceeds par value.
B-the market value of the stock rises above par value.
C-the stated value of capital stock is greater than the par value.
d-capital stock is issued at an amount greater than par value.
Answer:
The contributed capital of a corporation does not include
c-retained earnings.
C is the answer. Retained earning represents income earned from operations.
The rest of the choices are from investments (ie stockholders.)
Par value
b-is the legal capital established for a share of stock.
The par value of a stock represents its value authorized by the securities and exchange commision of a country.
The Paid-in Capital in Excess of Par Value account normally arises in the accounting records when
d-capital stock is issued at an amount greater than par value.
As the question describes it "Paid-in Capital in Excess of Par Value"
The first question the answer is A - The stated value of the common stock issued
The second question the answer is either B or D. I think B is the better answer because the original selling price does not have to be at par though it often is. so I'll say B
The third question the answer is D - capital stock is issued at an amount greater than par value.
To clarify par value, it is in fact B. However, the first answerer is not correct. In common stocks (as I assume the question is referring to), if a stock has par value at all, it is typically a penny. Nowadays, it's typically just a formality, as the stock markets are regulated to ensure that upon the opening sale, nobody is getting a better price than the IPO. The penny just reflects a "cost", so to speak, of getting the stock to market. To discuss the other 3 choices
A. Par value is in fact established well before the stock is issued. C. Stock prices reflect this D. The original selling price is the IPO, what you actually pay for a share on the first day at the opening bell.
Par value is then subtracted from the IPO sales to tell the accountants how much money the IPO actually generated.
Sorry to be long-winded, but if you're issuing 1,000 shares of stock at $10 apiece, and par value is a penny, then you've made $10,000 - .01(1000) = 10,000-10 = $9990 in equity for the company.
Hope this helps!
hi check this link its good
http://buyingandsellingshares.blogspot.c...
.
Hi,
Accounting is such a tedious task, it includes a lots of calulation stuffs and everything. If you are serious on accounting,<!--I would suggest you to have a look at the below website.
http://financialaccounting.50webs.com/...
It contains almost everything about accounting,-->i hope atleast it covers the info that you need of. Hope this helps.
Thanks.
Hi,
Accounting is such a tedious task, it includes a lots of calulation stuffs and everything. If you are serious on accounting,<!--I would suggest you to have a look at the below website.
http://financialaccounting.50webs.com/...
It contains almost everything about accounting,-->i hope atleast it covers the info that you need of. Hope this helps.
Thanks.
More Questions & Answers...