 In this presentation, we will take a look at multiple choice questions related to corporations. First question, power value a, common stock issued at low price, b, amount assigned by corporate charter, c, market value of stock, d, price stock is sold at, or e, priced used to calculate dividends. So we will go through this again and use the process of elimination and see if we can narrow this down. Power value a, common stock issued at low price. So power value is common stock issued at low price. If it was issued at power value possibly, but it doesn't sound right, I'm going to say that's not it, it's not a, it's not common stock issued at a low price, power value. B, amount assigned by corporate charter, that sounds kind of reasonable possibly, we don't know what power value is, we can say maybe c says market value of stock and again we might say maybe power value, market value, maybe those are the same thing, d says price stock is sold at and again we might say I don't really know maybe d and then e says price used to calculate dividends and that one seems kind of unusual, why would we use a price to calculate the dividends, I mean the board of directors would have to come up with dividends that are going to be paid somehow, maybe they're going to use a power value but not necessarily. So I'm going to say e doesn't look right, I'm going to be left with b, c and d, let's go through this again, power value either b, c or d either amount assigned by corporate charter or market value of stock or price stock is sold at. Now of those three, if we say power value and market value, probably aren't the same thing right, market value of stock is not going to be the same, exact thing is power value unless they're just two words for the exact same thing. So market values doesn't look like it's probably going to be it, price stock is sold at or amount assigned by corporate charter and again price stock is sold at probably is the same thing as market value, that's what we're going to sell the stock for, whatever we can get for it. So c and d are kind of the same thing, c's, d's basically defining c, can't be both of them. So I'm going to cross those out and be left with b which is the amount assigned by corporate charter, which is what the power value is. So the answer is b and just so we know the power value is just an arbitrary number and that's going to be the amount assigned and the reason is just to have conformity with the common stocks so it can be all standardized. So final answer, power value b, amount assigned by corporate charter. Next question, amount received from stockholders in exchange for its stock over the power value is posted to a, common stock, b, preferred stock, c, gain on sale of stock, d, additional paid in capital, e, stock is always issued at the power value. Let's go through this again with the process of elimination. Amount received from its stockholders in exchange for its stock over the power value is posted to. So if we can break that down, if we think about it, we're saying, okay, we're receiving something from the stockholders in exchange for stock. So we're selling the stock and we got money over the power value. We got something over the power value, whatever that means, right? So if we don't know what that means, we'll go through the process of elimination now. A says common stock, which is kind of what they bought. They bought common stock. That's typically, so we might say, hmm, A, maybe, B says preferred stock. Now typically when we buy stock, we're referring to common stock unless stated otherwise. So it's probably not preferred stock, I'm going to say that doesn't sound right. D says gain on sale of stock, which sounds kind of reasonable because we got, they're saying that we got more money than the power value of the stock. So maybe the stock is somehow worth the power value and we have a gain on the sale of stock. So I'm going to keep that for now. D says additional paid in capital, and again, that might sound familiar as something that's just like in the equity section of the stockholders' equity if we don't know what it is. So we might go, hmm, I'll keep that for now, it sounds familiar. But E says stock is always issued at the power value. And that doesn't seem reasonable. Why would we always issue the stock at a set price? We're going to issue it at whatever we can get for it. It's just like any other type of sale, sale of something, right? We're going to get as much as we can. So E doesn't seem right. So we're left with A, C, and D. Let's go through this again. Amount received from stockholders in exchange for its stock over the power value is posted to. We're left with A, C, or D, either common stock or gain on sale of stock or additional paid in capital. So we got an amount received from stockholders in exchange for stock. So we did sell stock and we sold the common stock. But the common stock is going to be recorded at par value. So what we're really saying is we got paid something over par value. So it's not going to be the common stock because we're going to record the common stock at par value. If you think of the journal entry, we would get cash, right? It might be good to write down the journal entry. We would get cash, let's say $100. And then the par value would go to the common stock credited, let's say $90. And we got more cash than the par value, let's say $10. Then the question is, well, does that go to a gain or does that go to additional paid in capital? Now it's not a gain because we're not selling something of operations in the partnership. We're selling of the corporation. We're selling the corporation itself. We're selling an equity interest in the corporation. We're not selling like an asset in the corporation. So that means that it's not a gain from selling something that the corporation owns. We're selling a component of the corporation. So it's going to be something in equity and that something is called additional paid in capital. So a final answer, amount received from its stockholders in exchange for its stock over the par value is posted to D, additional paid in capital.