Capital stock is defined as:

• A. Equity consisting of the total amount invested in the business in exchange for shares of stock at values up to the par value.
• B. The profits retained in the business for future use.
• C. The total value of treasury stock.
• D. The total liabilities of the company.

Answer: (A)

Capital stock is the portion of stockholders’ equity that represents the money investors have contributed in exchange for shares, recorded at the par value of those issued shares. In other words, it reflects the legal capital up to par value of issued shares; any amount paid above par goes into Additional Paid-In Capital (contributed capital in excess of par). This is distinct from retained earnings (profits kept in the business) and from treasury stock (shares the company has repurchased and holds), and it’s also not a liability. So the described concept aligns with capital stock.