What Is the Economic Significance of "Par Value" for Accounting

question 48

Multiple Choice

What is the economic significance of "par value" for accounting purposes?

• A)The par value determines the amount of contributed surplus.
• B)Par value has no economic significance for accounting purposes.
• C)Par values determines the amount of cash received from investors.
• D)Par value shares are not permitted under IFRS or ASPE.

---

Definitions:

Processing Cost

This is the expense incurred during the operation of converting raw materials into finished products, including labor and overhead costs.

Work in Process

Inventory that includes the materials, labor, and overhead costs for products that are in the production process but not yet complete.

Equivalent Units

A measure used in cost accounting to express the amount of work done on incomplete units in terms of complete units.

First-in

Commonly part of the term "First-in, First-out (FIFO)", a method used in inventory management where the oldest stock is sold first.