Download Stockholders` Equity

Stockholders' Equity Stockholders' equity represents the owners' claim to the business. These claims arise for two reasons. First, the owners have a claim on amounts they invested in the business by making direct contributions to the company (contributed capital). Second, the owners have a claim on amounts, the company has earned through profitable business operations (retained earnings). The goal of most business owners is to generate profits because this increases stockholders' equity and allows owners to get more money back from the company than what they put in (a return on investment). Contributed Capital is money paid into the corporation by its stockholders. • Common Stock (par value normally) • Additional Paid-­‐in capital or Paid-­‐in Capital in Excess of Par Retained Earnings is the cumulative amount of net income less the cumulative amount of dividends since the corporation was first organized. Contributed Capital and Retained Earnings are recorded on the Stockholders' Equity Section of the balance sheet. Citation: PacePrep (2015). Stockholders’ equity. Retrieved on April 8, 2015, from: http://paceprep.wikispaces.com/Stockholders%27+Equity