Reply to this post agree or disagreeDividend Policy and Retained Earnings?Prompt: Since initial contributed capital theoretically belongs to the stockholders, why are there legal restrictions on paying out the funds to the stockholders? Do you think this is fair???????ontributed capital, also known as paid-in capital, is the cash and other assets that shareholders have given a company in exchange for stock. Investors make capital contributions when a company issues equity shares based on a price that shareholders are willing to pay for them. The total amount of contributed capital or paid-in-capital represents their stake or ownership in the company (Hayes, 2021). Contributed capital may also refer to a company’s balance sheet item listed under stockholders’ equity, often shown alongside the balance sheet entry for additional paid-in capital.??????reditors have extended credit on the assumption that a given capital base would remain intact throughout the life of a loan. While they may not object to the payment of dividends from past and current earnings, they must have the protection of keeping contributed capital in place.ReferenceHayes, A. (2021, May 19). Understanding contributed capital. Investopedia.?ttps://www.investopedia.com/terms/c/contributed-capital.asp.AccountingBusinessFinancial AccountingFINANCE MISC
