Friday, January 17, 2014

Shareholders Equity Outline: Accounting for Lawyers

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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