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Owner's Equity = Contributed Capital ± Retained Earnings

Contributed capital is money that has been contributed to a company by its owners or by a direct investment made by stockholders in a corporation. A company would have stockholders if that company sells shares or stock.

Retained earnings is a companys' accumulated profits that have been put back or reinvested into the company. Some examples of retained earnings are supplies expense, rent expense, wages expense, interest expense, utilities expense, sales revenue, cost of goods sold, and depreciation expense.

A return on equity (ROE) is the net income divided by stockholders' equity.

Assets = Liabilities + Owners Equity

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