Week 2: The Statement of Change in Stockholder's Equity

Question 1

Three parts of Stockholder’s Equity

Answer 1

Contributed Capital

Retained Earnings

Treasury Stock

Question 2

Contributed Capital

Answer 2

Capital from investors

= common stock + APIC

Question 3

APIC

Answer 3

Additional Paid in Capital

The amount paid over the par value for stock

Question 4

What is it usually called when there is change in stockholder’s equity? What is the exception?

Answer 4

Change in stockholder’s equity is usually called revenue or expenses; however, that is not true when the money is coming from stockholders or borrowers, or going to stockholders in the form of dividends

Question 5

What is the equation for retained earnings at the end of the year?

Answer 5

Retained earnings from the beginning of the year (or end of last year) + Net income - Dividends

Question 6

Draw a Statement of Change in Stockholder’s Equity given:

RE^0 = 25k

NI = 20k

Div = 10k

CC^0 = 40k

Issued stock = 10k

Answer 6

Question 7

What is the purpose of the statement of change in stockholder’s equity?

Answer 7

To show how stockholder’s equity changed during the year