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

Which of the following would be classified as a stockholders' equity account?

Accounts Payable

Prepaid Expenses

Inventory

Retained Earnings

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Verified step by step guidance

Understand the concept of stockholders' equity: Stockholders' equity represents the owners' claim to the assets of a company after all liabilities have been deducted. It includes accounts such as common stock, additional paid-in capital, retained earnings, and treasury stock.

Review the provided options: Accounts Payable, Prepaid Expenses, Inventory, and Retained Earnings. Determine which of these fits the definition of stockholders' equity.

Analyze each option: Accounts Payable is a liability account, representing amounts owed to creditors. Prepaid Expenses are an asset account, representing payments made in advance for future expenses. Inventory is also an asset account, representing goods available for sale.

Focus on Retained Earnings: Retained Earnings is part of stockholders' equity. It represents the cumulative net income of the company that has been retained (not distributed as dividends) and reinvested in the business.

Conclude that Retained Earnings is the correct answer because it is classified as a stockholders' equity account, while the other options are either liabilities or assets.