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Write a 1 paragraph reflection from the chapter in which you Text: Write a quote from the chapter Interpret: What does that quote mean to you within an accounting context? Experience: How does this quote apply to anything in your experience? The paid-in capital contributed by the stockholders is recorded in separate accounts for each class of stock. If there is only one class of stock, the account is entitled Common Stock or Capital Stock. Retained earnings is a corporation's cumulative net income that has not been distributed as dividends. Dividends are distributions of a corporation's earnings to stockholders. Sometimes retained earnings that are not distributed as dividends are referred to i and earnings reinvested in the business n the financial statements as earnings retained for use in the business Net income increases retained earnings, while a net loss and dividends decrease retained earnings. The net increase or decrease in retained earnings for a period is recorded by the following two closing entries: 1. Debit each revenue account for its balance, credit each expense account for its bal ance, and credit (net income) or debit (net loss) the retained earnings account. 2. Debit the retained earnings account for the balance of each dividend account and credit each dividend account. Most companies generate net income. In addition, most companies do not p out all of their net income in dividends. As a result, Retained Earnings normally h a credit balance. However, in some cases, a debit balance in Retained Earnings may occur. A debit balance in Retained Earnings is called a deficit. Such a balance results from accumulated net losses. In the Stockholders' Equity section, a deficit is deducted from paid-in capital in determining total stockholders' equity