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Which of the following type of stock will not increase Additional Paid-in Capital when issued?

a) No-par value stock.
b) No-par with a stated value stock.
c) Preferred stock.
d) Par value stock.

1 Answer

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Final answer:

A no-par value stock will not increase Additional Paid-in Capital when issued since the entire amount received is recorded as paid-in capital, unlike stocks with a par value where excess over the par or stated value increases this capital account.

Step-by-step explanation:

The type of stock that will not increase Additional Paid-in Capital when issued is a no-par value stock. When a company issues no-par value stock, it does not have a par value, and the entire amount received from the sale of the stock is recorded as paid-in capital. This is different from stocks with a par value, where the portion of the sale price over the par value is recorded as Additional Paid-in Capital. For preferred stock and par value stock, any amount over the par or stated value goes into Additional Paid-in Capital. A no-par with a stated value stock would behave similarly to par value stock, with any amounts over the stated value being added to Additional Paid-in Capital.

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