When No-Par Stock Is Issued

question 40

Multiple Choice

When no-par stock is issued:

• A)The entire amount received is credited to the Additional Paid-in Capital account.
• B)The issue price is credited to the Capital Stock account.
• C)There is no legal capital created because there is no par or stated value.
• D)The transaction usually involves only an exchange for non-cash assets or services,since the stock has no value on the stock exchanges.

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Definitions:

Account

A record or statement that tracks financial transactions and the financial position of an individual, company, or other entity.

Balance

The equilibrium state where different elements are in the correct proportions or positions to create harmony or stability.

Immediate Payment

A payment method where the transaction is settled instantly or without any significant delay.

Annual Payments

Annual payments refer to the total amount of money paid or to be paid each year, which might include rent, interest, or salaries.