Financial statements for proprietorships and partnerships rarely make distinctions between paid-in capital and retained earnings.

Question

Quizplus · Accepted Answer

This is because proprietorships and partnerships do not issue stock, and so there is no concept of paid-in capital. Instead, any funds invested in the business by the owners or partners would simply be reflected in the equity section of the balance sheet as owner's (or partners') equity. Retained earnings, meanwhile, represent the accumulated profits of the business that have not been distributed to the owners.

Financial Statements for Proprietorships and Partnerships Rarely Make Distinctions Between