Types of equity

net income

Calculated on the income statement. It is the total amount remaining after subtracting all expenses from the total revenue. This amount is shown on the statement of equity and the equity portion of the balance sheet.

retained earnings

From the statement of equity, also shown on the balance sheet, this is accumulated net income from previous years minus any dividends paid to shareholders.

common stock

Refers to the capital the business received in exchange for issuing stock to stockholders

dividend

Dividends are what a business pays out to shareholders from business earnings

An owner of a partnership withdraws money often from business profits. Because the partner doesn’t receive a paycheck from their business, withdrawing business funds is how he pays himself for his work. What is it called when funds are taken out?

• Partner’s wage

• Dividends

• Owner’s equity

• Partner’s draw

• Retained earnings

Partner’s draw

When funds are added to create a corporation, what are the funds called?

• Retained earnings

• Partner equity

• Member equity

• Company stock purchases

• Dividends

Company stock purchases