Shareholders' equity is generally classified into two major categories:
A) contributed capital and donated capital.
B) contributed surplus and retained earnings.
C) retained earnings and accumulated other comprehensive income.
D) earned capital and contributed capital.

Question

Quizplus · Accepted Answer

Shareholders' equity is primarily divided into two main categories: earned capital and contributed capital. Earned capital is primarily represented by retained earnings, which are the profits that a company has earned over time and chosen to reinvest in the business rather than distribute to shareholders as dividends. Contributed capital (also known as paid-in capital) represents the funds that shareholders have invested directly in the company through the purchase of its stock.

Shareholders' Equity Is Generally Classified into Two Major Categories