PDA

View Full Version : Accounting on stockholders' equity


tzr007
Apr 20, 2009, 07:02 PM
The stockholder's equity is is reduced by revenues, expenses, and dividends... correct?

ROLCAM
Apr 20, 2009, 08:38 PM
The stockholder's equity is is reduced by revenues, expenses, and dividends... correct?

First determine what is what!
1) Equity = credit
2) Revenues = credit
3) Expenses = debit
4) Dividends = debit

Therefore Equity can only be reduced by debits
which in your case are:-

3) Expenses and 4) Dividends.

morgaine300
Apr 20, 2009, 11:56 PM
Revenues increase equity. That's what companies are in business to do - earn revenues and increase equity. When they're earning, they're increasing worth, not decreasing.

Even though it's good to learn revenue and expense separately, in reality you'll have these summarized on the income statement as net income. And then net income increased retained earnings. (Or net loss decreases.)