Which One of the Following Phrases Is Least Desirable When

question 106

Multiple Choice

Which one of the following phrases is least desirable when describing an amount received from a sale of stock in excess of the par value of the stock?

• A) paid-in capital in excess of par value
• B) capital surplus
• C) additional paid-in capital on preferred stock
• D) contributed capital in excess of par value

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Definitions:

Lease Agreement

A contract specifying the terms under which one party agrees to rent property owned by another party.

Economic Life

Refers to the duration over which an asset remains productive or useful for its intended purpose.

Capital Lease

A lease agreement that is considered a purchase of an asset for accounting purposes, because it transfers substantially all the risks and rewards of ownership.

Bargain Purchase Price

A price for an asset that is significantly below its fair market value.