Liabilities are obligations of a business or organization, or claims against assets. A common characteristic is capacity to reduce future assets or to require future services or products. The wording on financial statements well change due to the form of the organization. A proprietorship's and most partnership's balance sheets list the equity balance beside the owner's name. The names of a corporation's shareholders, however, are not listed in a balance sheet.
Contributed capital reflects shareholders' investments.
Retained earnings are the corporation's profits that have not been distributed to shareholders. Because a corporation is a separate legal entity, salaries paid to managers are reported as expenses on the income statement. However, if the owners of proprietorships or partnerships perform managerial services in the operations of the business, there is no expense reported on the income statement for their services. Applying both GAAP and GAAS help assure users that financial statements include relevant, reliable and comparable information. Generally accepted accounting principles were originally principles developed through common usage and deemed acceptable if they were permitted by most professionals.