What are portions of owner’s net equity contributed by investors in exchange for shares of stock?
Contributed Cpaital
These portions of owner’s net equity contributed by investors in exchange for shares of stock are commonly referred to as “paid-in capital” or “contributed capital”. Paid-in capital represents the total amount of funding that a company has received from investors in exchange for shares of its stock. This capital is not considered revenue or income for the company, but rather represents the funds that the company has available for investment, growth, and operations.
Paid-in capital can be further broken down into two categories: common stock and preferred stock. Common stock is the most basic form of ownership in a company, and represents a pro-rata share of the company’s profits and losses. Preferred stock, on the other hand, typically provides certain benefits to investors, such as the right to receive dividends before common stockholders, and may also have certain voting rights.
In summary, paid-in capital represents the funds that investors have contributed to a company in exchange for shares of its stock, and is an important component of the company’s overall capital structure.
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