Stockholders' equity equals contributed capital plus retained earnings.

Question

Quizplus · Accepted Answer

This is the basic equation for calculating stockholders' equity, which represents the total value of a company's assets that shareholders technically "own" after all liabilities have been taken into account. Contributed capital refers to the money investors have put into buying shares of the company, while retained earnings represent the profits the company has generated over time and chosen to keep (rather than distribute as dividends) to reinvest in the business or pay off debts.

Stockholders' Equity Equals Contributed Capital Plus Retained Earnings