Discussion of Owner's Equity

Discussion on Owners' Equity <Tab/>Stockholder's equity represents the owner's residual interest in the assets of the corporation. It is broken down into two components. Paid-in-capital amounts received from owners for shares of the corporation's stock. Earned capital, also known as retained earnings is the amount of net income retained by the corporation. Paid-in-capital includes stocks accounts, such as, preferred stock and common stock. Owners of preferred stock generally does not …

…more accurate reflection of a company's earning. <Tab/>Owners' equity in a corporation is defined as stockholder's equity, shareholders' equity, or corporate capital. Stockholders' equity is the difference between the assets and the liabilities of the enterprise; Stockholders' equity represents the cumulative net contributions by stockholders plus earnings that have been retained. Stockholders' equity grows if the enterprise is profitable. It can shrinks, or disappear altogether, if the enterprise is unprofitable.