What distinguishes the two most commonly used categories of owners' equity?
A) The amount of equity within each type of asset-current versus fixed and intangible
B) The financial form of the equity-cash investments versus stock and bond investments
C) The source of the equity-paid-in capital versus retained earnings
D) The use of the equity-invested versus saved
E) The age of the equity-older investments and earnings versus newer investments and earnings

Question

Quizplus · Accepted Answer

The two most commonly used categories of owners' equity are paid-in capital (the amount of money investors have put into the company through purchases of stock) and retained earnings (the portion of a company's profits that have been reinvested in the business rather than paid out to shareholders as dividends). These categories are distinguished by their source, with paid-in capital coming from investors and retained earnings coming from the company's operations.

What Distinguishes the Two Most Commonly Used Categories of Owners