Crash Course in Accounting and Financial Statement Analysis, Second Edition

Summary: Shareholders’ Equity

Shareholders’ Equity represents monetary contributions from a company’s stock (equity) owners and from the course of its operations (Exhibit 6.23). Along with liabilities, Shareholders’ Equity forms another major source of funding for companies. Companies can choose to fund themselves through the sale of their shares of stock and through retained earnings, which they have accumulated over the course of their existence.

Exhibit 6.23. Shareholders’ Equity Typically Consists of (But is Not Always Limited to):

Preferred Stock	Stock that has special rights and takes priority over common stock
Common Stock Par Value	Par value of units of ownership of a corporation
Additional Paid-In Capital (APIC)	Represents capital received by a company when its shares are sold above their par value
Treasury Stock	Common stock that had been issued and then reacquired (bought back) by a company
Retained Earnings	Total amount of earnings of a company since its inception minus dividends and losses (if any)

19. Shareholders’ Equity

Exercise Q1: Line items typically found in the shareholders’ equity section include: Retained earnings Treasury stock Cash Preferred stock Additional paid-in capital ...