¶ … PRACTICES RELATING TO STOCKHOLDERS' EQUITY
Hello. I write a project paper Accounting-302 (intermediate accounting 2). The topic Stockholder's Equity corporation. The emphasis practices,, corporations operate. For, I identify company ( - company) conduct a mini case study topic Stockholder's Equity company.
Common practices relating to stockholders' equity
Stockholders' equity is an item of the balance sheet that represents the capital that has been raised by the investors in the business in exchange for stock, referred to as paid-in capital, retained earnings, and donated capital. It represents the stake of the investors in the company and is calculated by deducting the company's total liabilities from their total assets. Accounting experts commonly refer to stockholders' equity as the book value of the company since it captures the funds that were originally invested by the investors and the additional investments that they made thereafter Lowe, 1961.
It also captures earnings that the company retained over time. For older companies, most of which started as small outfits have grown and retained earnings represent the largest portion of stockholders' equity.
Types of stockholders' equity accounts
There are several types of stockholders' equity accounts. The first is common stock, which is the portion of the stock that is paid in by the investors. This is usually attributable to the par stock value. If the par stock value is minimal, then the balance on this account is often small. Where the stock does not have par value, for example in a startup, this account is not used in the balance sheet.
The second account is the additional paid-in capital on common stock. This represents the price that the investors paid for common stock in the company at a price above the fair market value of the stock....
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