Economic Events Affecting Shareholder Equity

The video tutorial explains the concept of shareholders equity, focusing on how it differs from market value. It covers the components of shareholders equity, including capital contributions and retained earnings, and how profits and losses affect it. The tutorial also discusses the impact of distributing capital or earnings to shareholders, issuing new shares, and repurchasing shares on shareholders equity. These economic events can alter the equity interest of shareholders in a company.

What are the two main components of shareholders' equity?

• Market value and demand

• Assets and liabilities

• Capital contributions and retained earnings

• Profits and losses

How does distributing retained earnings to shareholders affect shareholders' equity?

• It has no effect on shareholders' equity

• It increases shareholders' equity

• It doubles shareholders' equity

• It reduces shareholders' equity

What happens to the percentage of ownership when a company issues new shares?

• It remains the same

• It becomes zero

• It increases

• It decreases

What is the effect of repurchasing shares for treasury stock on shareholders' equity?

• It reduces shareholders' equity

• It increases shareholders' equity

• It has no effect on shareholders' equity

• It doubles shareholders' equity

Which of the following is an economic event that affects shareholders' equity?

• Launching a new product

• Changing the company logo

• Issuing new shares

• Hiring new employees