Other components of owner's equity

- As is almost always the case,…things are always a little more complicated…than they appear at first glance.…Previously, we said that owners' equity consists…of two parts, paid-in capital and retained earnings,…and those two accounts cover about 90%…of the activity in owners' equity.…But there are a couple of other things…worth mentioning about owners' equity.…In addition to paid-in capital and retained earnings,…the equity section of a corporation often includes…treasury stock and accumulated other comprehensive income.…

Let's take a brief look at these two items.…When a company buys back its own shares,…accountants call the repurchased shares treasury stock.…The amount a company spends to repurchase its own shares…is usually shown as a subtraction…from total stockholders' equity.…Like a dividend payment, a treasury stock purchase is a way…for a corporation to distribute cash to stockholders.…The difference is that in a dividend payment,…the cash is distributed evenly to all stockholders,…and all stockholders maintain their ownership…