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SHall_Week1_Owners+equity+paper_graded 100

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Running header: Owners Equity Paper Owners Equity Paper Shelly Hall ACC/423 April 27, 2011 Tracy Ohlinger 1
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Owners Equity Paper Owners Equity Paper The following paragraphs will discuss some various aspects of capital, such as describing paid-in capital and earnings capital, the details of the importance of the separation of paid-in capital from earnings capital, and why this separation of capital is important to the investor, and the difference between basic shares and diluted shares. Importance of separation of paid-in capital Investors invest in a company in exchange for stocks equal to capital. Contributed capital, or paid in capital, is the amount the investors invest. According to Kieso, “… capital stock and additional paid-in capital, constitute contributed (paid-in) capital…contributed capital (paid-in capital) is the total amount paid in on capital stock—the amount provided by stockholders to the corporation for use in the business.” (Kieso, 2007, pg 729) The reason the reporting is important in separating paid in capital from earned capital is keeping the investors segment (or the amount provided by stockholders) separate from earned capital (the amount earned from day to day business). Paid-in capital reflects the performance of
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