Question

The stockholders’ equity accounts of Willis Corporation at January 1 appear below:

a) Common stock
b) Retained earnings
c) Preferred stock
d) Treasury stock

Answer 1

The stockholders' equity accounts of Willis Corporation include common stock, retained earnings, preferred stock, and treasury stock, which together reflect the value and financial health .

Step-by-step explanation:

The stockholders’ equity accounts of Willis Corporation consist of several elements that reflect the ownership equity held by the shareholders in a corporation.

A corporation is a business owned by shareholders who have limited liability for the company's debt but a share of the company's profits.

These profits can be distributed as dividends, which are direct payments from a firm to its shareholders.

Here are the components of stockholders’ equity accounts:

• Common stock—represents ownership in a company and entitles shareholders to vote at shareholder meetings and receive dividends.
• Retained earnings—accumulated net income that has been retained by a corporation for future use, rather than being distributed as dividends.
• Preferred stock—a type of stock that generally has a higher claim on the assets and earnings than common stock and often pays a fixed dividend.
• Treasury stock—previously issued stock that has been bought back from shareholders by the issuing corporation.

Understanding these accounts helps in gauging a company's financial health and the value it offers to its shareholders, which includes equity growth and dividends.