What is the difference between common stock and retained earnings?
February 19th, 2010 | by admin |C27 asked:
which one:
1) the common stock account increases due to paid capital, while the retained earnings account increases due to profitable operations.
2) the common stock account may sometimes have a negative balance, while the retained earnings account is always positive.
3) common stock is an asset account, while retained earnings is a stockholders equity account.
4) common stock has a normal credit balance, while retained earnings has a normal debit balance.
which one:
1) the common stock account increases due to paid capital, while the retained earnings account increases due to profitable operations.
2) the common stock account may sometimes have a negative balance, while the retained earnings account is always positive.
3) common stock is an asset account, while retained earnings is a stockholders equity account.
4) common stock has a normal credit balance, while retained earnings has a normal debit balance.
One Response to “What is the difference between common stock and retained earnings?”
By what? on Feb 25, 2010 | Reply
1 is false – common stock and Additional Paid-In Capital (APIC – money received above par value) are different things, and retained earnings can increase from a million things besides just operations
2 is false – common stock account is nothing more than the par value of outstanding shares – you’re multiplying 2 positive numbers, which cannot give you a negative number
3 is false – they’re both shareholder’s equity
4 is false – they go the same way.
seriously, whoever is writing these questions for you is a complete and total moron. i usually get ticked off when people post their homework help questions here instead of the homework help section, but you actually have an excuse for needing real advice!
1 is the least stupid, though (even though it has the most mistakes).
seriously, though, you should smack your teacher on monday.