FRAME 8 - FRAME8 Stockholdersequity RETAINEDEARNINGS

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FRAME 8 Stock holders equity If brought by revenue transaction RETAINED EARNINGS Can’t be recorded as capital stock because no additional shares were issued and  does not represent a direct capital investment by stockholders Rather indirect stockholder investment Expectation   yield net earnings If net earnings are not distributed they are in fact retained   retained earnings Stockholders equity    either net earnings given out = capital stock or retained = retained earnings  normally revenue revenues affecting retained earnings only shown at the end of the accounting  period Performing services  Either get paid now   retained earnings (se) and cash (a) Later   accounts receivable (se) and accounts payable (a) Accounts receivable  The right to collect from the customer at a later date Similar to paying cash because Stockholders Equity increasing but not paid in 
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FRAME 8 - FRAME8 Stockholdersequity RETAINEDEARNINGS

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