Which of the Following Statements Is NOT True About the Par

question 26

Multiple Choice

Which of the following statements is NOT true about the par value of common stock?

• A) The par value is not the same as the market value of the stock.
• B) The par value is a nominal amount identified in the corporate charter.
• C) The par value is the amount credited to the common stock account when the stock is issued.
• D) The par value is the amount credited to common stock when treasury stock is reissued.

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Definitions:

Variable Costing

An accounting method that only includes variable production costs—direct materials, direct labor, and variable manufacturing overhead—in product cost.

Unit Product Cost

Unit product cost is the total expense incurred to produce, assemble, and prepare a single unit for sale, encompassing both direct costs and allocated overheads.

Absorption Costing

An accounting method that includes both variable and fixed manufacturing costs in the cost of a product, used for external reporting.

Unit Product Cost

The combined sum of fixed and variable expenses incurred in the creation of one unit of a product.