Balance sheet - equity

Question 1

Equity

Answer 1

Liabilities and Equity represent the company’s sources of funds (how it pays for assets).
Equity represent sources of funds through:
• Preferred stock issuance
• Equity investment (net of share repurchases ‘treasury stock’)
• Retained earnings (what the company has earned through operations since its inception)

Question 2

Preferred Stock

Answer 2

Stock that has special rights and takes priority over common stock.

Question 3

Common Stock

Answer 3

Represents capital received by a company when it issues shares.

Question 4

Treasury Stock

Answer 4

Common stock that had been issued and then reacquired (bought back) by a company .

Question 5

Retained Earnings

Answer 5

Total company earnings / losses since its inception less all dividends.

Question 6

Other comprehensive income (OCI)

Answer 6

OCI is an equity line item on the B/S that captures the accumulation of income or loss that a company has recognized over time that is not recognized directly on the I/S and thus not captured in retained earnings. OCI includes gains and losses from foreign currency translations, unrealized gains and losses on available for sale securities, etc.