Question

if a corporation has only common stock outstanding, which of the following constitutes legal capital at a particular date? multiple choice the total amount of stockholders' equity. the sum of the common stock account and any additional paid-in capital. the amount in the common stock account. the sum of the common stock account and retained earnings.

Answer 1

Legal capital of a corporation with only common stock outstanding is the amount in the common stock account, reflecting the value of the stock when issued.

Step-by-step explanation:

When considering what constitutes legal capital for a corporation with only common stock outstanding at a particular date, legal capital is the portion of capital that represents the par or stated value of the issued shares. Therefore, the legal capital is the amount in the common stock account. This account represents the basic ownership interest in the corporation, reflected by the value assigned to the common stock when issued, which could be at par value or no-par with a stated value. It does not include any additional paid-in capital, retained earnings, or other parts of stockholders' equity.

Answer 2

Legal capital at a particular date for a corporation with only common stock outstanding is constituted by the amount in the Common Stock account.

In the case of a corporation with only common stock outstanding, legal capital at a particular date is constituted by the amount in the Common Stock account (option A). Legal capital represents the amount of funds contributed by shareholders and serves as a protection for creditors. It is usually a specified minimum amount required by law and is recorded in the Common Stock account.

Complete Question :

If a corporation has only common stock outstanding, which of the following constitutes legal capital at a particular date?

A. The amount in the Common Stock account.

B. The sum of the Common Stock account and any additional paid-in capital.

C. The total amount of stockholders' equity.

D. The sum of the Common Stock account and retained earnings.