Ask Experts Questions for FREE Help !
Ask
    kwgordon's Avatar
    kwgordon Posts: 1, Reputation: 1
    New Member
     
    #1

    Nov 26, 2007, 01:09 PM
    Paid in capital versus earned capital
    Why is it important to keep paid in capital separate from earned capital?
    CliffARobinson's Avatar
    CliffARobinson Posts: 1,416, Reputation: 101
    Ultra Member
     
    #2

    Mar 11, 2012, 02:54 PM
    It is important to keep these two forms of capital separate because they represent two distinctive sources of funding. Paid-in capital represents new money intended to aid the firm in increasing their earned capital. Earned capital represents the firm's profits from operations. To combine the two would misrepresent the earning potential from operations.
    Source

Not your question? Ask your question View similar questions

 

Question Tools Search this Question
Search this Question:

Advanced Search

Add your answer here.


Check out some similar questions!

Paid in Capital [ 1 Answers ]

Does Paid in Capital in excess of Par - Preferred belong to the preferred shareholders?:confused:


View more questions Search