The accounting equation states that a company's total assets are equal to the sum of its liabilities and its shareholders' equity. On a company's balance sheet, common stock is recorded in the "stockholders' equity" section.Contributed capital refers to the funds that shareholders invest in a company in exchange for ownership stakes. The statement of stockholders' equity tells you the changes that occurred in various equity accounts (common stock, retained earnings, etc.) Because a company's working capital is the difference between its current assets and liabilities. And that's important!