Key Equity

Question 1

Common stock & additional paid-in capital (APIC)

Answer 1

Represents market value of shares at time shares were issued by the company. Fixed

Question 2

Treasury stock

Answer 2

Cumulative value of shares the company has repurchased from investors.

Fixed

Question 3

Retained earnings

Answer 3

Represents company’s saved-up, after tax profits, minus dividends

Question 4

Accumulated other comprehensive income (AOCI)

Answer 4

Section for ‘miscellaneous saved-up income’ - items like effect of foreign currency exchange rates changes.

Question 5

Equity =

Answer 5

Net assets = net funds invested into business by owners, so owners have a claim to net assets

Equity = capital contributions + retained earnings

Question 6

Capital contributions
- sole prop
- partnership
- corporation

Answer 6

• owner’s equity
• partner contributions
• shareholder’s equity

Question 7

Retained earnings for each owner type

Answer 7

Retained earnings

Question 8

Withdrawals
- sole prop
- partnership
- corporation

Answer 8

• drawings
• partner drawings
• dividends