The par value of the outstanding shares is defined as:
A) Retained earnings
B) Legal capital
C) Book value of equity
D) None of the above

Question

Quizplus · Accepted Answer

The par value of the outstanding shares is the minimum legal capital that a corporation must retain in order to protect its creditors. It represents the nominal or face value of each share that has been issued and is usually a small amount such as $0.01 or $0.10 per share. Retained earnings and book value of equity are both measures of the company's profitability and financial position, but they are not directly related to par value.

The Par Value of the Outstanding Shares Is Defined As