Question

the total amount of cash and other assets that a corporation receives from its stockholders in exchange for its stock is: multiple choice always equal to its par value. always equal to its stated value. referred to as paid-in capital. referred to as retained earnings. always below its stated value.

Answer 1

The total amount of cash and other assets the corporation receives from its stockholders in exchange for its stock is referred to as paid-in capital.

What is paid-in capital?

The sum of money a firm has raised via the sale of shares to investors is known as paid-in capital. Common stock, preferred stock, and additional paid-in capital are added as balance-sheet line items to determine paid-in capital. The capital that has actually been paid and for which shares have already been issued is the paid-in capital.

Any additional payments made to the principal (owner), if the initial payment is regarded as extra paid-in capital, are treated as dividend distributions (or wages) and are therefore taxable. The sums that organizations get from investors in exchange for their stock are known as paid-in capital. This is a crucial element of a company's overall equity. Stock issuance is the principal source of paid-in capital.

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