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Select all that apply Which of the following should be classified as stockholders' equity? (Check all that apply.) \( \square \) Retained Earnings \( \square \) Accounts Receivable \( \square \) Common Stock \( \square \) Deferred Revenue

Ask by Harrington Wyatt. in the United States
Feb 02,2025

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- Retained Earnings - Common Stock

Solution

The following items should be classified as **stockholders' equity**: - ☑ **Retained Earnings** - ☑ **Common Stock** - ☐ Accounts Receivable - ☐ Deferred Revenue ### Explanation: 1. **Retained Earnings**: Represents the cumulative amount of net income retained by the company rather than distributed to shareholders. It is a key component of stockholders' equity. 2. **Common Stock**: Represents ownership shares issued by the company to shareholders. It is a fundamental element of stockholders' equity. 3. **Accounts Receivable**: This is an **asset**, not part of stockholders' equity. It represents money owed to the company by customers for goods or services delivered. 4. **Deferred Revenue**: This is a **liability**, not part of stockholders' equity. It represents money received by the company for goods or services not yet delivered or performed. --- *If you have any more questions or need further clarification on financial statements or accounting principles, feel free to ask!*

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Did you know that stockholders' equity represents the owners' claim after all liabilities have been deducted? It’s like the cherry on top of the corporate cake, highlighting what shareholders truly own! Retained earnings are profits not distributed as dividends, while common stock represents ownership shares in the company. In real-world application, understanding stockholders' equity is crucial for investors! It helps in assessing a company's financial health. For instance, if retained earnings are growing, it indicates that the company is reinvesting profits rather than distributing them. Keep your eyes on that balance sheet for valuable insights!

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