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Owners' Equity Paper

In: Business and Management

Submitted By miosoti
Words 632
Pages 3
Owners' Equity Paper
ACC 423
September 5, 2011
University of Phoenix

Owners' Equity Paper
The investments of stockholders, corporations depend a lot on to fund their business operations. The company stands to gain and grow from selling their stock, when viewing each entity separately. The investor hopes to gain and earn a profit by investing in a company in hopes that their stock prices will go up. The company and the investor depend on each other. The more opportunity the company has to grow with the more people invests. Also the more opportunities for the company to grow, the happier they are able to make their investors, who in turn spend more money.
The owners’ equity discusses the importance that common stockholders and preferred stockholders require in a company. The stockholders are the entities who have paid-in capital to a company to offer the investment planned to be used for operations of the company. In the next paragraph it will be explained the meaning of maintained the paid-in capital detached from earned capital. Also, an investigation of how important can be the paid-in capital or earned capital to an investor; and from the investor point of view, the basic or diluted earnings per share is the most important.
To further understand owners’ equity, the importance to keep paid-in capital independent from earned capital. Which is more important as an investor, paid-in capital or earned capital? Last which is more important as an investor, basic or diluted earnings per share will be discussed. The importance to keep paid-in capital separate from earned capital is so investors can decide between the two.
Paid-in capital is important to organizations, because investors need to be able to see that the company is able to meet obligations through operations alone, and their ability to pay dividends. Paid-in capital is money that the company has

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