Question

Select all that apply: Stockholders' equity, reported on the balance sheet, consists of which of the following accounts?

a) Retained earnings
b) Dividends paid-in capital
c) Corporate liabilities
d) True
e) False

Answer 1

Stockholders' equity on the balance sheet includes retained earnings and contributed capital (paid-in capital), representing the owners' claims on the business after liabilities. Corporate liabilities are not part of stockholders' equity, and the 'True' and 'False' choices are not relevant.

Step-by-step explanation:

Stockholders' equity, reported on the balance sheet, consists of financial accounts that represent the owners' claim on the company after debts and liabilities have been paid. Among the choices given, stockholders' equity consists of retained earnings (a), which is the portion of net earnings not paid out as dividends but retained by the company to be reinvested in its core business or to pay debt. It also includes contributed capital, often referred to as paid-in capital (the 'dividends paid-in capital' option seems to be a typo, as dividends are typically not classified under equity), the capital that shareholders contribute to the company through the purchase of stock.

Corporate liabilities (c) are not part of stockholders' equity; they represent the company's debts and obligations. The options 'True' (d) and 'False' (e) are irrelevant to the context of the question. Therefore, the accounts that consist of stockholders' equity are retained earnings and contributed/paid-in capital.