The shareholders equity section of the balance sheet includes paid-in capital (invested capital), treasury stock, and retained earnings (earned capital). Paid-in Capital. Par Value of Preferred and/or Common Stock. Paid-in capital in excess of par for Preferred and/or Common Stock. Treasury Stock. Shares of stock re-acquired by a company. Reduces total equity. Retained Earnings. Earnings retained by the company rather than being distributed as dividends.
Account. Classification. (a) Investment in preferred stock. (a) Current asset/Investment. (b) Treasury stock. (b) Equity. (c) Common stock. (c) Equity. (d) Cash dividends payable. (d) Current liability. (e) Accumulated depreciation. (e) Contra-asset. (f) Interest payable. (f) Current liability. (g) Deficit. (g) Equity. (h) Trading securities. (h) Current asset. (i) Unearned revenue. (i) Current liability. LO 2 Identify the major classifications of the balance sheet.