Learning Objective $18-01$ Describe the components of shareholders' equity and explain how they are reported in a statement of shareholders' equity.

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Shareholders$$ equity is the owners$$ residual interest in a corporation$$s assets. It arises primarily from $(1)$ amounts invested by shareholders and $(2)$ amounts earned by the corporation on behalf of its shareholders. These are reported as $(1)$ paid$-$in capital and $(2)$ retained earnings in a balance sheet. A statement of shareholders$$ equity reports the sources of the changes in individual shareholders$$ equity accounts.