The Discount on Common Stock Account Reflects

question 99

Multiple Choice

The Discount on Common Stock account reflects:

• A)The difference between the par value of stock and its issue price when it is issued at a price below par value.
• B)One share's portion of the issued corporation's net assets recorded in its accounts.
• C)The difference between the par value of the stock and the amount paid-in by stockholders when the amount paid-in is more than par value.
• D)An amount of assets defined by state law that stockholders must invest and leave invested in a corporation.
• E)The amount a corporation must pay in addition to dividends in arrears if and when it exercises its right to retire a share of callable preferred stock.

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Definitions:

Present Obligation

An obligation that arises from past events, the settlement of which is expected to result in an outflow from the entity of resources embodying economic benefits.

Contingent Liability

A potential financial obligation that may arise in the future, depending on the outcome of a specific event.

Liabilities

Financial obligations or debts that an entity owes to others, which must be settled in the future through the transfer of assets or services.

Provisions

Liabilities of uncertain timing or amount, set aside in anticipation of future obligations or costs.