Nature of Owners’ Equity
Nature of shareowners’ equity . Owners’ equity may be viewed from the residual approach:
Assets - Liabilities = Owners’ Equity
- Owners’ equity is chiefly contributed capital plus net income less net losses less owners’ withdrawals.
- Sources of contributed capital:
- Capital contributed for shares.
- Retained earnings.
- Unrealized capital (long-term investments).
- Capital is contributed (for shares) and earned