TIP: Paid-in capital is often called contributed capital. Additional paid-in capital is often called additional contributed capital. Stockholders are often called shareholders. Retained earnings is sometimes called earned capital.
TIP: Make sure you understand the components of total paid-in capital which include the capital stock accounts plus additional paid-in capital accounts. Capital stock accounts include Common Stock and Preferred Stock. Additional paid-in capital accounts include Paid-in Capital in Excess of Par Value and Paid-in Capital from Treasury Stock.
TIP: As you progress through this chapter, pay particular attention to the effect of the various transactions on total paid-in capital, retained earnings, and total stockholders' equity.
TIP: Additional paid-in capital can arise from many situations which include the following: the issuance of capital stock at a price above par, some treasury stock transactions and the retirement of stock.
TIP: There is a considerable amount of terminology relating to capital stock. You should have a clear understanding of all of the terms mentioned in this chapter before going on to subsequent chapters.
TIP: The par value of a stock is an arbitrary value assigned to a share of stock at the time of incorporation and is printed on the stock certificate. Par value usually has no direct relationship to the stock's issuance price or to its market value at any date subsequent to the issuance date. The par value of ...