Owner’s
equity
-
Residual
OWNERS CONTROL
interest in
a business
RETAINED EARNINGS
after
deducting
RESERVES @ HISTORICAL COST
all
liabilities
from assets
EQUITY vs LIABILITY
- Equity usually has no redemption or redeemed at board’s decision
- Liability redeemed at holder’s decision
SHARE CAPITAL vs RESERVES
- Share capital: Contributions by shareholders with no obligation to distribute funds
- No definition for reserves, they arise from transactions that do not involve actual
changes in equity.
Types of reserves
Retained earnings
Gains and losses i.e. Revaluation, mark
to market
Statutory reserves
equity
-
Residual
OWNERS CONTROL
interest in
a business
RETAINED EARNINGS
after
deducting
RESERVES @ HISTORICAL COST
all
liabilities
from assets
EQUITY vs LIABILITY
- Equity usually has no redemption or redeemed at board’s decision
- Liability redeemed at holder’s decision
SHARE CAPITAL vs RESERVES
- Share capital: Contributions by shareholders with no obligation to distribute funds
- No definition for reserves, they arise from transactions that do not involve actual
changes in equity.
Types of reserves
Retained earnings
Gains and losses i.e. Revaluation, mark
to market
Statutory reserves
