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Does total stockholders' equity equal a. Paid-in capital + retained earnings, b. Paid-in capital + Additional...

Does total stockholders' equity equal a. Paid-in capital + retained earnings, b. Paid-in capital + Additional paid-in capital - retained earnings, c. Capital stock + Additional paid-in capital - Retained earnings, d. Paid-in capital + Capital stock + Retained earnings

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Answer #1

Total Stockholder's equity = Paid in Capital + Retained Earnings

Retained earnings form part of stockholder's equity hence it will be added while calculating stockholder's equity. Therefore option b & c is incorrect.  

Capital stock is the number of shares that company is authorised to issue and it is the maximum number of shares that can ever be outstanding. It will not form part of stockholder's equity, hence option d is incorrect.

Therefore, the correct option is 'a' i,e. Paid in Capital + Retained Earnings

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