Question

Which one of the following selections is a not component of Paid-in Capital? Select one: A. Retained earnings B. Common stock C. Additional paid-In capital D. All of the above

Answer 1

Answer:

A. Retained earnings

Explanation:

The retained earnings and the paid-in Capital are components of the stockholder's equity in the balance sheet.

The retained earnings is the accumulated net income balance over the years. It is affected by the company's profit or loss and dividend declared and paid.

The common stock and Additional paid-In capital are elements of the paid-in Capital .

Answer 2

Answer:

The correct answer is letter "A": Retained earnings.

Explanation:

Paid-in capital is listed on the Balance Sheet's Equity section. It represents the amount of money shareholders paid into the company by buying stocks. It is essentially two accounts: the par value of the stock and the excess over par. The amount of paid-in capital helps prospective investors and lenders to make decisions.

Retained earnings -the earnings a company keeps instead of redistributing it to investors- is not considered to compute the paid-in capital.