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How is the stockholders' equity section of a corporate balance sheet different from that in a single owner business?
How is the stockholders' equity section of a corporate balance sheet different from that in a single owner business?
Expert Solution
Under Single Owner Business, the only account in the Owner's Equity is the Capital Balance of the owner. The balance is the capital is composed of beginning capital plus net income less owner's withdrawal, these is presented in the statement of owner's equity.
Under Corporation, the accounts are composed of Common Stock and other kinds of stocks, Additional Paid in Capital, and Retained Earnings. Retained Earnings is composed of Net Income less the paid dividends.
| Single Owner Business | Corporation | |
|---|---|---|
| Owner's Capital | Common Stocks and other type of stocks | |
| Additional Paid in Capital | ||
| Retained Earnings |
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