What is the difference between common stock and retained earnings?

which one:


1) the common stock account increases due to paid capital, while the retained earnings account increases due to profitable operations.


2) the common stock account may sometimes have a negative balance, while the retained earnings account is always positive.


3) common stock is an asset account, while retained earnings is a stockholders equity account.


4) common stock has a normal credit balance, while retained earnings has a normal debit balance.|||1 is false - common stock and Additional Paid-In Capital (APIC - money received above par value) are different things, and retained earnings can increase from a million things besides just operations


2 is false - common stock account is nothing more than the par value of outstanding shares - you're multiplying 2 positive numbers, which cannot give you a negative number


3 is false - they're both shareholder's equity


4 is false - they go the same way.





seriously, whoever is writing these questions for you is a complete and total moron. i usually get ticked off when people post their homework help questions here instead of the homework help section, but you actually have an excuse for needing real advice!





1 is the least stupid, though (even though it has the most mistakes).


seriously, though, you should smack your teacher on monday.|||1