Common Stock vs. Additional Paid-in Capital

This video shows the difference between Common Stock and Additional Paid-in Capital. Common Stock and Additional Paid-in Capital are both Stockholders' Equity accounts that appear on the Balance Sheet, and they both represent capital given to the company in exchange for shares of stock. Common Stock and Additional Paid-in Capital are two separate accounts, however, because Common Stock is money received for the stock's par value while Additional Paid-in Capital is any money received over and above the stock's par value. For example, if Twitter issues 1 share of stock with a par value of $2, and an investor gives Twitter $30 for that share of stock, then Twitter would record an increase of $2 to its Common Stock account and an increase of $28 to its Additional Paid-in Capital account. The combined effect would increase Twitter's Stockholders' Equity by $30. Common Stock and Additional Paid-in Capital are sometimes lumped together and called "contributed capital." Some companies issue common stock that has no par value. If Twitter issued 1 share of no-par stock for $30, it would simply increase Common Stock by $30. In that scenario, there would be no Additional Paid-in Capital.— Edspira is the creation of Michael McLaughlin, an award-winning professor who went from teenage homelessness to a PhD. Edspira’s mission is to make a high-quality business education freely available to the world. — SUBSCRIBE FOR A FREE 53-PAGE GUIDE TO THE FINANCIAL STATEMENTS, PLUS: • A 23-PAGE GUIDE TO MANAGERIAL ACCOUNTING • A 44-PAGE GUIDE TO U.S. TAXATION • A 75-PAGE GUIDE TO FINANCIAL STATEMENT ANALYSIS • MANY MORE FREE PDF GUIDES AND SPREADSHEETS http://eepurl.com/dIaa5z — SUPPORT EDSPIRA ON PATREON *  / prof_mclaughlin   — GET CERTIFIED IN FINANCIAL STATEMENT ANALYSIS, IFRS 16, AND ASSET-LIABILITY MANAGEMENT https://edspira.thinkific.com — LISTEN TO THE SCHEME PODCAST Apple Podcasts: https://podcasts.apple.com/us/podcast... Spotify: https://open.spotify.com/show/4WaNTqV... Website: https://www.edspira.com/podcast-2/ — GET TAX TIPS ON TIKTOK   / prof_mclaughlin   — ACCESS INDEX OF VIDEOS https://www.edspira.com/index — CONNECT WITH EDSPIRA Facebook:   / edspira   Instagram:   / edspiradotcom   LinkedIn:   / edspira   — CONNECT WITH MICHAEL Twitter:   / prof_mclaughlin   LinkedIn:   / prof-michael-mclaughlin   — ABOUT EDSPIRA AND ITS CREATOR https://www.edspira.com/about/ https://michaelmclaughlin.com