Posted on:

26 Apr 2023


Paid-in capital

The paid in capital represents the firm's initial capital and any money that comes in later if shareholders decide to increase the capital. Retained earnings represents the accumulated earnings, they represents the sum of net income generated from previous years that have not been destributed to the shareholders.

I was expecting that for previous years accumulated earnings not distributed to the shareholders would have been included on the paid-in capital account since the shareholders decided to re-invest. Please clarify how their relationship


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