If Shares Are Issued for Less Than Par Value, the Account

question 259

Multiple Choice

If shares are issued for less than par value, the account

• A) Share Premium-Ordinary is credited.
• B) Share Premium-Ordinary is debited if a debit balance exists in the account.
• C) Share Premium-Ordinary is debited if a credit balance exists in the account.
• D) Retained Earnings is credited.

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Definitions:

GAAP

Generally Accepted Accounting Principles, which are standards and procedures companies follow in preparing financial statements.

Valuation Allowance Accounts

Accounts used to reduce the carrying value of assets to an amount that approximates their fair value, especially when it is impossible to realize the entry value.

Balance Sheet Accounts

Financial accounts that are reported in the balance sheet, including assets, liabilities, and equity accounts, representing a company's financial position at a specific point in time.

Trading Investments

Securities bought and held primarily for selling them in the near term to profit from their price fluctuations.