The total amount of cash and other assets received by a corporation from its stockholders in exchange for its stock is:
A)Always equal to its par value.
B)Always equal to its stated value.
C)Referred to as paid-in capital.
D)Referred to as retained earnings.
E)Always below its stated value.

Question

Quizplus · Accepted Answer

The total amount of cash and other assets received by a corporation from its stockholders in exchange for its stock is referred to as paid-in capital. It may be equal, below or above the par or stated value of the stock, depending on various factors such as demand, market conditions, investor sentiment, etc. Retained earnings, on the other hand, are the portion of a company's profits that are kept after dividends are paid to shareholders and are used for reinvestment or other purposes.

The Total Amount of Cash and Other Assets Received by a Corporation