Shareholder’s Equity Outline: Accounting for Lawyers
- Shareholder's Equity is divided into:
- Contributed capital – original investment by owners
- Par or nominal or stated value of the shares which has a legal definition.
- Remaining amount called additional paid-in capital (APIC), share premium, or capital contributed in excess of par value.
- Retained earnings – amount of earnings left in the firm after the payment of dividends to the owners.
- Net accumulation of earnings of the firm since the beginning
- Increased by net income
- Reduced by losses, and by the payment of dividends
- Beginning Retained Earnings + Net Income – Dividends paid = Ending Retained Earnings
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