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Accounting All-in-One For Dummies, with Online Practice, 2nd Edition
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Accounting All-in-One For Dummies, with Online Practice, 2nd Edition

by Joseph Kraynak
April 2018
Beginner content levelBeginner
768 pages
20h 9m
English
For Dummies
Content preview from Accounting All-in-One For Dummies, with Online Practice, 2nd Edition

Chapter 5

Explaining Ownership in the Equity Section of the Balance Sheet

IN THIS CHAPTER

check Meeting the three types of business entities and two types of stock ownership

check Investigating paid-in capital and retained earnings

check Checking out reductions in stockholder’s equity

check Understanding how corporations pay their investors

This chapter gets into the nitty-gritty of how the owners’ interest in the business shows up on the balance sheet. Equity (also referred to as net assets) is the combined total of each owner’s investment in the business. Both terms refer to the difference between assets (resources a company owns) and liabilities (claims against the company).

Understanding How Owner Equity Varies among Business Entities

Depending on the type of business entity, the owners’ equity section of the balance sheet can range from bare-boned to quite elaborate, as explained in the following sections. For more about different business entities in general and the pros and cons of each, check out Book 6, Chapter 2.

Sole proprietorship

Sole proprietorships (one-owner businesses) have an equity ...

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Publisher Resources

ISBN: 9781119453895Purchase book