The book capital of a corporation is determined by:
A) the sum of the capital in excess of par and the retained earnings.
B) the par value of preferred stock.
C) the sum of the treasury stock and the preferred stock.
D) the number of shares issued multiplied by the par value of each share.
E) the market price of the company's debt.

Question

Quizplus · Accepted Answer

The book capital of a corporation is determined by multiplying the total number of shares issued by the par value of each share. This is because book capital represents the total amount of equity that has been raised by the corporation through the sale of its stock, and the par value of the stock is the legal capital that the corporation must maintain in order to protect its creditors. The other options are not correct because they do not reflect the calculation of book capital.

The Book Capital of a Corporation Is Determined By