Question

The additional paid-in capital account represents profit to the corporation and, as such, it is credited to Retained Earnings.

A. True
B. False

Answer 1

B. False

Step-by-step explanation:

The retained earnings show distributions available out of profit to the company shareholders after all other obligations to third parties are satisfied.

Hence, additional paid-in capital account would not necessarily form part of Retained Earnings but is included as an increase in the equity account.