The common stock account in a company's balance sheet is measured as:

-The number of common shares outstanding multiplied by the stock's par per share

-The number of common shares outstanding multiplied by the stock's current market price per share

-The number of common shares issued multiplied by the stock's par per share

-None of these answer choices are correct

Question

Business

Madonna

26 October, 05:23

The common stock account in a company's balance sheet is measured as:

-The number of common shares outstanding multiplied by the stock's par per share

-The number of common shares outstanding multiplied by the stock's current market price per share

-The number of common shares issued multiplied by the stock's par per share

-None of these answer choices are correct

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Answers (1)

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Bethany Lindsey · Answer 1

-The number of common shares issued multiplied by the stock's par per share

Explanation:

When measuring a company's balance sheet account we use the stocks par value because any money that is received in excess of par when selling shares is recorded separately and the additional paid in capital account, and in the common stock account only the par value is considered while calculating it. Also we will use the number of common shares issued and not the number of common shares outstanding because when calculating the common stock account according to accounting conventions we have to use the common stock issued.