Which of the following accounts are included in shareholders' equity?
I. interest paid
II. retained earnings
III. capital surplus
IV. long-term debt
A) I and II only
B) II and IV only
C) I and IV only
D) II and III only
E) I and III only

Question

Quizplus · Accepted Answer

Shareholders' equity represents the residual interest in the assets of a company after deducting liabilities. Therefore, accounts included in shareholders' equity include retained earnings, which is the accumulated profits and losses of the company, and capital surplus, which is the amount received in excess of the par value of the company's shares. Interest paid is a liability and long-term debt is also a liability, so they are not included in shareholders' equity.

Which of the Following Accounts Are Included in Shareholders' Equity