The par value or stated value of stock represents the amount of legal capital that a corporation must maintain for the protection of the creditors. This statement is True.
What is stock?
- A stock, usually referred to as equity, is a type of investment that denotes ownership in a portion of the issuing company.
- Shares, also known as units of stock, entitle its owners to a share of the company's assets and income in proportion to the number of shares they possess.
What do you mean by corporation?
- A corporation operates, realizes net income or loss, incurs tax obligations, and distributes earnings to shareholders.
- When a corporation makes a profit, the corporation is taxed; but, when dividends are paid to shareholders, the shareholders are taxed.
- It results in a double tax.
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