2.4 Statement of Changes in Equity

Question 1

What disclosures do the statement of changes in equity provide?

Answer 1

provides disclosure of changes during the accounting period in the separate equity accounts

Question 2

Identify the equity accounts listed in the statement of changes in equity

HINT: (7)

Answer 2

• retained earnings
• common stock
• preferred stock
• additional paid in capital (APIC)
• accumulated OCI
• non-controlling interest
• treasury stock (if available)

Question 3

Statement of Retained Earnings:

What does the statement of retained earnings do?

Answer 3

• reconciles the beginning and ending balances of the account

Question 4

Statement of Retained Earnings:

How is the statement of retained earnings reported?

Answer 4

• as part of the statement of changes in equity in a separate column

Question 5

Statement of Retained Earnings:

Identify the 4 adjustments that can cause changes in retained earnings

Answer 5

1 - Net income (loss) for the period;

2 - Any prior-period adjustments, net of tax;

3 - Dividends declared; and

4 - Certain other rare items, e.g., re-issuance of treasury stock under the cost method

Question 6

Statement of Retained Earnings:

How are earnings treated that are retained in the business for special purposes?

Answer 6

• appropriated (restricted) to a special account