Paid-in-capital in excess of par represents the amount of proceeds

Question

Quizplus · Accepted Answer

Paid-in-capital in excess of par represents the amount of proceeds in excess of the par value from the original sale of common stock. Par value is the minimum price at which the stock can be issued, and paid-in capital in excess of par reflects the amount of money received from selling the stock above its par value. Therefore, option B is the correct answer. Option A is incorrect because it refers to the original sale of stock without acknowledging the excess of par value. Option C and D are also incorrect because they refer to the current market or book value of the stock, which is not related to the concept of paid-in capital in excess of par.

Paid-In-Capital in Excess of Par Represents the Amount of Proceeds