Asked by Heath Gillette on May 28, 2024
Verified
Shareholders' equity is usually comprised of
A) common shares and dividends declared.
B) common shares and retained earnings.
C) dividends declared and retained earnings.
D) net income and retained earnings.
Retained Earnings
The portion of a company's profits that is kept or retained and not distributed as dividends to shareholders, used for reinvestment in the business or to pay debt.
Common Shares
Equity securities that represent a portion of the ownership of a corporation, typically granting voting rights and dividends.
Shareholders' Equity
The residual interest in the assets of a corporation after deducting liabilities.
- Understand the composition of shareholders' equity.
Verified Answer
GA
GURNOOR AULAKHMay 31, 2024
Final Answer :
B
Explanation :
Shareholders' equity typically consists of common shares and retained earnings. Common shares represent the equity capital contributed by shareholders, while retained earnings are the accumulated profits that have been reinvested in the business rather than distributed to shareholders as dividends.
Learning Objectives
- Understand the composition of shareholders' equity.