Intermediate Accounting (16th Edition)

Published by Wiley
ISBN 10: 1118743202
ISBN 13: 978-1-11874-320-1

Chapter 5 - Balance Sheet and Statement of Cash Flows - Review and Practice - Questions - Page 238: 32


The profession has recommended that the use of the term 'surplus' to be discontinued in the balance sheet presentations of the stockholder's equity. This term has an association outside accounting that is quite different from its meaning in the accounts or balance sheet.

Work Step by Step

Additionally, the use of the terms capital surplus, paid-in-surplus as well earned surplus are normally confusing to a non-accountant and thus leads to misinterpretation.
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