These concepts in the balance sheet has been in a state of confusion blur, today finally understand.
Let us talk about equity , if the shares in a limited liability company's balance sheet, and that this project is indeed known as the "capital", but if it is a limited liability company's balance sheet, and that the project is called "paid-in capital" . But whether it is capital or paid-in capital, its essence is the same, in China, the share capital must be equal to the registered capital. When companies grow, shareholders funds invested more than part of the registered capital is called capital reserve .
Equity (Capital Stock): shareholders' equity share in the company, and more used to refer to the stock;
But not every company will appear in the capital reserve, there is a company that will certainly appear, which is a listed company. For example: A small now opened a listed company, the stock issuance time of 1 yuan, 100 million shares issued, this time the share capital is 100 million yuan, but as time goes on, a lot of people optimistic about their company, the share price at this time It rose 20 yuan / share, then the time to remove 100 million in equity, and the rest is capital reserve of 1.9 billion.
Capital reserve (Additional Paid-in Capital): corporate investors receive beyond their registered capital share, as well as gains and losses recognized directly in owner's equity in. Including capital premium capital reserve (share premium) and gains and losses recognized directly in owner's equity.
Share capital and capital reserves are to take the money coming in from outside, then the rest of the money within the company what it is? That is, surplus reserves and retained earnings .
Surplus reserves : Legal let us profit distribution
Retained earnings : distribution companies do not want to profit
Xiao Ming see the above two wonder, FML, which is hard for a year, even if the law does not give the distribution of profits, the company also left money doing it?
So is the case, the Chinese Company Law, must come up with 10% of surplus reserve, which is Chinese characteristics Oh! The company does not intend to allocate profits is due to veterans found that there is a very good project next year plans to invest in, so you have to keep part of the money, as the project start-up capital for the coming year.
Surplus reserve (Surplus Zeserve): extracts from a variety of enterprise net profit in accordance with the provisions of the accumulation of capital
Retained earnings (Reltained Earnings): unallocated corporate profits. It may continue to be distributed in future years, before unallocated, are all part of this equity.
