Table of contents

1. Introduction to Accounting1h 21m
2. Transaction Analysis1h 13m
3. Accrual Accounting Concepts2h 38m
4. Merchandising Operations2h 30m
5. Inventory1h 55m
6. Internal Controls and Reporting Cash1h 16m
7. Receivables and Investments3h 8m
8. Long Lived Assets5h 1m
9. Current Liabilities2h 19m
10. Time Value of Money1h 23m
- Time Value of Money Equations
  35m
- Using Time Value of Money Tables
  47m
11. Long Term Liabilities2h 45m
12. Stockholders' Equity2h 15m
13. Statement of Cash Flows2h 24m
14. Financial Statement Analysis5h 25m
15. GAAP vs IFRS56m

12. Stockholders' Equity

Retained Earnings

Financial Accounting

12. Stockholders' Equity

Retained Earnings

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Multiple Choice

What do shareholders typically receive from firms in return for their contribution of capital?

Dividends and potential capital gains

Guaranteed interest payments

Fixed annual salaries

Repayment of principal at maturity

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Verified step by step guidance

Understand the role of shareholders: Shareholders are individuals or entities that invest capital into a company by purchasing its shares, making them partial owners of the company.

Identify the benefits shareholders receive: Shareholders typically benefit from their investment in two primary ways: dividends (a portion of the company's profits distributed to shareholders) and potential capital gains (an increase in the value of the shares over time).

Eliminate incorrect options: Guaranteed interest payments, fixed annual salaries, and repayment of principal at maturity are not typical benefits for shareholders. These are more relevant to creditors or employees, not equity investors.

Clarify dividends: Dividends are payments made by a company to its shareholders, usually derived from profits. They are not guaranteed and depend on the company's financial performance and dividend policy.

Clarify capital gains: Capital gains occur when the value of a shareholder's investment increases over time, allowing them to sell their shares at a higher price than the purchase price. This is also not guaranteed and depends on market conditions and company performance.