Week 6 Stockholders Equity and Statement of Cash Flows Discussion Accounting for and Reporting Equity graded Stockholders Equity is an important heading in a corporate balance sheet Let s begin the discussion of stockholders equity by asking How is the stockholders equity section of a corporate balance sheet different from that in a single owner business Anybody Responses Responses are listed below in the following order response author and the date and time the response is posted Response Date Time Author W el co m e to w ee k 6 th re a de d di sc us si o ns Professor Wilson 3 11 2013 3 52 16 PM Class Prof Wilson Please consider the following discussion point as we start week 6 of class Stockholders Equity is an important heading in a corporate balance sheet Let s begin the discussion of stockholders equity by asking How is the stockholders equity section of a corporate balance sheet different from that in a single owner business Anybody R E W el c o m e to w ee k 6 th re a d e d di sc u ss io n s Elizabeth Smith 4 7 2013 6 25 46 AM Single owner business has one owner verse Corporations has many Single owner business there will be simple equity section in their balance sheet The Stockholders Equity has many areas that are not relevant to single owner businesses Below is the definition of Stockholders Equity which is more has more relevance to a Corporation Investopedia explains Stockholders Equity Stockholders equity is often referred to as the book value of the company and it comes from two main sources The first and original source is the money that was originally invested in the company along with any additional investments made thereafter The second comes from retained earnings that the company is able to accumulate over time through its operations In most cases especially when dealing with older companies that have been in business for many years the retained earnings portion is the largest component http www investopedia com terms s stockholdersequity asp Kristin Muchowski 4 7 2013 8 09 39 AM R E W el c o m e t o w e e k 6 t h r e a d e d d is c u ss io n s Equity is the value of ownership Any company has both assets and liabilities which owners use to operate a business with the goal of creating more value through use Owners also invest their own capital into the business All of this extra value or excess debt if business goes badly can be attributed to the owner s or owners actions and is therefore placed in the Equity section of the balance sheet Sole Proprietorship A business owned by one person has a very simple Equity section consisting of one account entitled Capital Any initial investment on the part of the owner several thousand dollars in startup cash from a personal savings account for example appears in the Capital account When the business generates a profit the extra money appears in the Capital account Likewise the owner can withdraw money from the Capital account for her own expenses or to pay business expenses wiki Geri Waldbillig RE Welcome to week 6 threaded discussions The stockholders equity section of a corporate balance sheet is much more detailed than that in a single owner business 4 7 2013 12 43 21 PM Rachid Khalfaoui 4 7 2013 8 23 45 PM R E W el c o m e to w ee k 6 th re a d e d di sc u ss io n s Pr Wilson and class The distinct difference in the balance sheet between a sole proprietorship and a corporate is in the stockholders equity Owners equity sections for corporations are often labeled shareholders equity since stockholders technically own corporations jointly The shareholders equity sections for a corporate include shares of stock outstanding dividends paid out and retained earnings Instead in the owner s equity private businesses list dollar amounts contributed by company owner called capital The single capital account in the owner s equity section captures all the money that would be reflected separately in a corporation s retained earnings and contributed capital accounts Rachid David Neville RE Welcome to week 6 threaded discussions The difference between single owner and a corporation s equity section of the balance sheet is the stockholders section Publicly traded companies have stockholders where single owners do not and must show shares of stock outstanding dividends paid out and retained earnings 4 8 2013 9 15 20 AM Vs a Single Corporate for a Balance Sheet The Difference in a http smallbusiness chron com difference balance sheet corporate vs singleowner business 15830 html 39k Makiko Kishida R E 4 8 2013 10 47 07 AM W el c o m e to w ee k 6 th re a d e d di sc u ss io n s Prof Wilson Class For a single owner business there would not be a stockholders equity section on the corporate balance sheet since there are no stockholders for a single owner business Instead there is an owners equity section lists the amount of money contributed by the owner and any other outside contributors Stockholders equity section for a corporation would show the number of shares outstanding any dividends that were paid out and retained earnings This is because for a corporation the stockholders are the owners of the company instead of a single owner like above Darnell Flax RE Welcome to week 6 threaded discussions Stockholders equity is to a corporation what owner s equity is to a sole proprietorship 4 8 2013 11 12 05 AM Owners of a corporation are called stockholders because they own shares of the company s stock Where as a Single Owner it the sole owner so there are no stock involved R E W el c o m e t o w e e k 6 t h r e a d e d d is c u ss io n s Professor Wilson 4 8 2013 2 15 13 PM Darnell et al and rest of the class Thanks for the postings and discussion on stockholders equity Your postings lead me to another question what do the following terms mean Authorized shares issued shares unissued shares outstanding shares and treasury shares Can you explain with examples from a real life company s financial statements Prof Wilson Rachid Khalfaoui 4 8 2013 8 21 45 PM R E W el c o m e t o w e e k 6 t h r e a d e d d is c u ss io n s Pr Wilson and class Authorized shares refer to the maximum number of shares that a company can issue to the shareholders It is the share capital which the company is authorized to issue by its memorandum of association and it can only be increased and decreased through a vote by the shareholders Outstanding shares refer to the number of stocks that a company actually has issued to …
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