Contributed Capital
Contributed capital refers to the cash or other assets that is paid by investors and shareholders to a company to buy and hold stock.
Updated: November 25, 2023
Contributed capital refers to the cash or other assets that is paid by investors and shareholders to a company to buy and hold stock. These stocks must be purchased directly from the issuing company. It can not be purchased through third parties or investors buying and selling amongst themselves.
The total value of contributed capital represents the company ownership of investor. Contributed capital is present on the balance sheet under stockholder equity when companies balance their finances.
Accounting software is used by companies to manage or keep track of equity of potential assets of shareholders. These tools are often used by organizations to help them stay organized, assist in automating invoices, and create accurate financial statements.
Direct listings; Initial public offerings (IPOs); Direct public offerings; Secondary public offerings; Issues of preferred stock; Fixed and current assets like land, property, or equipment; Intangible assets like patents, trademarks, copyrights, and goodwill and Reduction of liability are different kinds of contributed capital exit in exchange for stock.
Contributed capital has minimal risk to the company since no collateral from the company is required to grow capital through shareholder equity and also there is no legally required payback or repayment plan for contributed capital. Contributed capital can be considered as a permanent and continuous source of financing and equity.