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Owner's / Stockholders Equity


Owner's equity is known as the capital account. It is calculated by negating the liabilities from the assets. This is mainly used for a sole proprietorship firms as the owner's equity goes up, so does the right of the owner on the business.

Stock holders equity is similar to the owners equity. This term is used for large corporations where an owner is also a stock holder. But the owner will have more percentage of stocks.

In a balance sheet the owners or stockholders equity is organized in the following order. First is the paid-in capital, then the "retained earnings" and finally the "treasury stock" is listed in a balance sheet.

Online Bookkeeping Software Paid-in Capital:
Paid in capital is the capital contributed by the investors by purchasing the stocks of the company. Usually the stock is quoted a rate by the company but investors interested in the company purchase shares at a higher price. Normally paid in capital comprises of the capital stock also.

Online Bookkeeping Software Retained earnings:
Retained earning is the net income or profit that is not given to the share holders but is invested in the same business. It is also known as called earned surplus or accumulated earnings or unappropriated profit. Retained earnings are calculated by negating the dividend paid out to the shareholders from the net income. Retained earning that are appropriated and used in the business will be in the balance sheets. This is displayed in the bottom of a balance sheet under the equity section. The unappropriated earning is given as dividends.

Online Bookkeeping Software Treasury Stock:
Treasury stock or the reacquired stock is the stock purchased back by the company that floated the stock.

Online Bookkeeping Software Reasons:
A company may opt to give shares instead of dividends to the stockholders.
Even if the shares are undervalued they are bought back. To avoid the threat of acquisition by another company.