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CSS Financial and Cost Accounting P-1 QUESTION #1199
Question 1
When a corporation issues shares above their par value, the excess amount is credited to:
  • Retained Earnings
  • Share Premium Account✔️
  • Capital Account
  • Revenue Account
Correct Answer Explanation
When shares are issued at a price above par value, the par value portion is credited to the Share Capital account and the excess (premium) is credited to the Share Premium Account (also called Additional Paid-in Capital). This premium is part of equity but is kept separate from retained earnings.