In balance sheet, sum of retained earnings and common stock are considered as_____________?
Correct answer: D. Common equity
- A. Preferred equity
- B. Due equity
- C. Common perpetuity
- D. Common equity
Explanation
Common equity consists primarily of common stockholders' contributed capital and retained earnings, which are profits kept in the business. Preferred equity is a separate ownership category with preferential rights.
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About Business Finance
Business finance explains how organisations plan, obtain and use money while balancing risk, return and liquidity. Topics include financial statements, time value of money, budgeting, working capital, capital structure, sources of finance, investment appraisal and cost of capital. Capital budgeting evaluates long-term projects, whereas working capital manages day-to-day operations.
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