The share capital does not change (unless they issue more shares). The total capital (share capital + retained earnings) obviously does change as they make more profit, but the extra profit increases the retained earnings while the share capital stays the same.
Thank you very much Mr. John Moffat. As I understood the limited company has the different presentation from sole trader on equity because is important to show the retained earnings changed every year, which is extra from the share capital.
Very well explained Mr. John. Just a short query here, why sole trader do not use the term “Retained earning” and presenting it the same why as in limited companies. I understand it is requirement for limited companies to present this why but why can’t the sole trader follow the same rule? same presentation?
SyedFaizanHassanKazmi says
In the above lecture, in the case of Limited companies, he has been accumulating retained earnings but not share capita Why is this?
John Moffat says
The share capital does not change (unless they issue more shares). The total capital (share capital + retained earnings) obviously does change as they make more profit, but the extra profit increases the retained earnings while the share capital stays the same.
HoPhucAn says
best wishes to you, mr Moffat
John Moffat says
Thank you 馃檪
Joanne94 says
Hello John,
Quick question if it’s alright, for a limited company, how is share capital determined if it’s not provided? Do we use the accounting equation?
Many thanks,
radhwaan says
Thank you so much sir. May God bless you sir.
RuthLouka says
Thank you for sharing your resources. You are a star!
John Moffat says
Thank you for your comment.
rm67 says
Thank you very much Mr. John Moffat. As I understood the limited company has the different presentation from sole trader on equity because is important to show the retained earnings changed every year, which is extra from the share capital.
shakir7385 says
Very well explained Mr. John. Just a short query here, why sole trader do not use the term “Retained earning” and presenting it the same why as in limited companies. I understand it is requirement for limited companies to present this why but why can’t the sole trader follow the same rule? same presentation?
John Moffat says
He/she can if they want to but it is a bit pointless since it is all owed to the owner.
SurbhiRajvanshi says
Thank you Sir. Well explained.
John Moffat says
Thank you for your comment 馃檪
gurpreet9080 says
Thank you sir for the well explained differences.
John Moffat says
Thank you for your comment 馃檪