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June 30, 2008

What is capital surplus?

In the past, capital surplus was used to describe what is now referred to as paid-in capital in excess of par.

For example, when a corporation issues shares of its common stock and receives more than the par value of the stock, two accounts are involved: 1) the account Common Stock is used to record the par value of the shares being issued, and 2) the amount that is greater than the par value is recorded in an account entitled Paid-in Capital in Excess of Par—Common Stock, or Premium on Common Stock.

Many years ago, the account Paid-in Capital in Excess of Par—Common Stock and the account Premium on Common Stock were referred to as capital surplus.

Learn more about Stockholders’ Equity.

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About the Author: Harold Averkamp (CPA) has worked as an accountant, consultant, and university accounting instructor for more than 25 years.

He is the author of the 2010 Master Accounting Download Package which has been praised for it's ability to simplify accounting in a way that anybody can understand.



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Comments

19 Responses to “What is capital surplus?”

  1. prakash on July 4th, 2008 2:13 am

    meaning for accoutancy

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  8. tahiree on July 8th, 2008 6:43 am

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  12. rodney on July 11th, 2008 3:41 am

    deferred expenses, unbilled income.

    when you use them?

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  14. kiran on July 16th, 2008 7:57 pm

    what is variable cost?

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  18. junaid on August 20th, 2008 4:35 pm

    please tell me..
    what is Statement of change in equity and why it makes?
    and what is a nature of Retained earning?

  19. priyanka on June 1st, 2009 1:21 am

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