Stockholders’ equity refers to money invested in a business, both at startup and after. Stockholders’ equity accounts are viewable on the business’s balance sheet, chart of accounts, and general ledger, and detail donated capital, paid-in capital, and retained earnings.
Paid-in capital, or permanent capital, refers to amounts paid to a corporation when stock shares were issued. Paid-in capital details funds raised from equity, not from ongoing operations. While all corporations have common stock, only a few have preferred stock as well.
A common stock account details the par/stated value of common stock issued shares, if the stock has a par/stated value. If the stock has neither, this account records the whole amount received by a corporation.
Common stock issued by a corporation, minus the par/stated value, is recorded in a Paid-in Capital in Excess of Par Value- Common Stock account.
A corporation’s retained earnings are parts of net income which is kept by that corporation instead of sent to shareholders. A retained earnings account details cumulative earnings while subtracting cumulative dividends paid to shareholders. Therefore, earnings are added to this account, while dividends are subtracted.