The total owners’ equity is usually under a number of subcaptions on the corporation’s balance sheet.

a. List the major subdivisions of the stockholders’ equity section of a corporate balance sheet, and describe briefly the nature of the amounts that will appear in each section.
b. Explain fully the reasons for subdividing the amount of stockholders’ equity, including legal, accounting, and other considerations.
c. Describe three kinds of transactions that will result in paid- in or permanent capital in excess of legal or stated capital.
d. Various accounting authorities have recommended that the terms paid-in surplus and earned surplus not be used in published financial statements. Explain briefly the reason for this suggestion, and indicate acceptable substitutes for the terms.

  • CreatedDecember 17, 2014
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