2010-09-16 Retained Earnings vs Shareholders Earnings vs Owners Equity

2010-09-16 Retained Earnings vs Shareholders Earnings vs Owners Equity

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Retained Earnings vs Shareholders Earnings vs Owners Equity.doc I have been trying to understand the difference between retained earnings and shareholders’ equity. From what I can find is: retained earnings is the amount (or is it a percentage) of net earnings that is retained by a company to be reinvested or to reduce liabilities, while shareholders' equity (also known as "net worth") is: o total assets minus the total liabilities, or o the amount a company is financed though common and preferred shares Shareholders' Equity = Share Capital + Retained Earnings - Treasury Shares owners' equity is: o total assets minus the total liabilities, or My remedial evaluation is: Retained Earnings have to be invested or used to reduce liabilities, while Owner's Equity does not have to be used for anything. .. it can just set there in the capital account if that is what the owner(s) want? Shareholders’ Equity is like Owner’s equity except you have shareholders involved and you have to subtract
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This note was uploaded on 09/19/2010 for the course ACCT 220 taught by Professor Ullmann during the Fall '10 term at University of Nebraska Kearney.

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