Final answer:
Stockholder's Equity consists of two main components: Common Stock and Retained Earnings. These components reflect the shareholder investments and the accumulated earnings that have not been distributed as dividends.
Step-by-step explanation:
The two components of Stockholder's Equity are Common Stock and Retained Earnings. This part of the balance sheet reflects the equity that shareholders have in a company. Common Stock represents the equity that has been invested by shareholders through the purchase of stock. Retained Earnings, on the other hand, represent the accumulated portion of net income that is retained by the company rather than distributed to shareholders as dividends. The total stockholder's equity is critical for a firm's balance sheet as it helps to represent the net worth of the company once all liabilities are subtracted from the total assets.