A capital surplus is obtained when the par value of a stock is greater than the retained earnings.

Name: A capital surplus is obtained when the par value of a stock is greater than the retained earnings.
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Question

Quizplus · Accepted Answer

A capital surplus is obtained when a company receives proceeds from the sale of its stock that exceed the stock's par value. It is different from retained earnings, which are profits that a company has earned and kept over time. Therefore, the statement is incorrect.

A Capital Surplus Is Obtained When the Par Value of a Stock