What is Stockholders Equity?
Stockholders equity is the net worth of a corporation represented by its assets less liabilities. It is the equivalent of the owners equity for a sole proprietorship. A share of stock is the unit of ownership.
Stockholders equity is shown on the balance sheet of the business at book value which is represented by the original amount subscribed for the stock plus any retained earnings which are attributable to the stockholders and have not been distributed to them as dividends.
The market value of the stock held by the stockholder is set by the market in which it is traded, and cannot be found from the balance sheet of the business.
The terms stockholders equity and stock are sometimes referred to as shareholders equity and shares.
Additional information on stockholders equity journal entries can be found in our equity tutorial.
For further information see the Wikipedia definition.
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