Two of the three primary account classifications within shareholders' equity are:
A)Preferred stock and retained earnings.
B)The par value of common stock and retained earnings.
C)Paid-in capital and retained earnings.
D)Preferred and common stock.

Question

Quizplus · Accepted Answer

The two primary account classifications within shareholders' equity are paid-in capital and retained earnings. Preferred and common stock are both types of paid-in capital, so D is a close option, but not the best answer as it only mentions two types of stock and excludes retained earnings. A and B are incorrect because they either only mention one type of equity account or incorrectly categorize common stock as a primary account classification within shareholders' equity.

Two of the Three Primary Account Classifications Within Shareholders' Equity