Define the terms paid-in-capital and retained earningsDefine.pdf

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Define the terms paid-in-capital and retained earnings Define the terms paid-in-capital and retained earnings Define the terms paid-in-capital and retained earnings Solution Paid in Capital represent the Contributed Capital by an investor into the Company, It is the fund raised by the company in form of Equity or Prefered Stock Capital Paid in Capital Includes Par value & Additional Paid in Capital i.e Premium on Issue of Equity or Preffered Stock, It is being Reflected in Balance Sheet Under the Stockholders Equity Section Retained Earning is the amount retained by the firm or company out of Net Income i.e Net Income Less Dividend Paid, It is being retained for reinvestment of fund in the business or It is being used to repay the debt . It is also being Shown in Balance Under the Stockholders Equity Section. Ending retained Earning balance is being calculated by using the below formula : Ending retained Earning balance = Beginning Retained Earning + net Income - Dividend Paid.

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