Not Included as Equity

C

Cash does not represent equity; equity consists of the book value of a company; i.e., assets, minus liabilities.

In a corporate balance sheet, equity represents the residual interest in the assets of a company after deducting liabilities. It reflects the ownership interest of the shareholders in the company. The equity section of a balance sheet typically includes various components, such as common stock, preferred stock, retained earnings, and additional paid-in capital.

The question asks which of the following options would not be included as equity in a corporate balance sheet. Let's analyze each option to determine the correct answer:

A. Common stock: Common stock represents the basic ownership interest in a company and is typically issued to shareholders. It represents the equity capital contributed by the shareholders and is a key component of the equity section in a balance sheet. Therefore, common stock would be included as equity.

B. Preferred stock: Preferred stock is a class of stock that generally has certain preferences over common stock, such as a fixed dividend rate. It represents an ownership interest in the company but with certain preferential rights. Preferred stock is typically included as part of the equity section on a balance sheet because it represents the shareholders' ownership stake. Therefore, preferred stock would be included as equity.

C. Cash: Cash is an asset and not an equity component. It represents the amount of money a company has on hand or in its bank accounts. Cash is reported on the asset side of the balance sheet, not as equity. Therefore, cash would not be included as equity.

D. Retained earnings: Retained earnings represent the accumulated profits of a company that have not been distributed to shareholders as dividends. Retained earnings are an important component of the equity section in a balance sheet as they reflect the company's retained profits over time. Therefore, retained earnings would be included as equity.

Based on the analysis above, the option that would not be included as equity in a corporate balance sheet is:

C. Cash