Common stock represents an external source of stockholders' equity,whereas retained earnings represents an internal source.

Question

Quizplus · Accepted Answer

Common stock is sold to outside investors to raise capital, making it an external source of stockholders' equity. Retained earnings are profits that are kept within the company and not distributed to shareholders, making them an internal source of stockholders' equity.

Common Stock Represents an External Source of Stockholders' Equity,whereas Retained