This is the part of the balance sheet that shows by dollar amount how much of the company is actually owned by the owners. It also breaks that ownership into how much was initially contributed by the owners (Contributed Capital) and how much is company profits that were retained in the company (Retained Earnings).
John invested $10,000 in his company and received 10,000 shares of stock. The company earned $2000, but John did not take that money home. He kept it in the company bank account. The Statement of Stockholders’ Equity would show a total of $12,000, $10,000 in Contributed Capital and $2000 in Retained Earnings.