Which of the following is NOT a component of equity?

Equity includes several components that reflect the ownership interest in a company, and each of the elements listed—retained earnings, common stock, and additional paid-in capital—are integral parts of equity.

Retained earnings represent the cumulative profits that a company has reinvested in the business, rather than distributing them to shareholders as dividends. Common stock signifies the ownership shares issued to shareholders, representing their stake in the company. Additional paid-in capital reflects the funds received from shareholders above the par value of the stock, indicating further investment by owners.

In contrast, liabilities are obligations that a company owes to external parties, such as loans or accounts payable, and do not represent ownership in the company. Therefore, among the options given, liabilities are the component that does not belong to the equity section of a company's balance sheet. This distinction is crucial for understanding financial statements and the overall financial health of an organization.