First, paid-in capital and retained earnings are the major categories of stockholders' equity. Paid-in capital, also referred to as contributed capital, is the amount that the corporation received from stockholders when the corporation issued its stock. Paid-in capital is also referred to as permanent capital.
Retained earnings is the cumulative amount of after tax net income earned by the corporation since its inception minus the dividends that have been distributed to the stockholders since the corporation began.
