Do The statement of stockholder\'s equity explains changes in equity from net income?
Solution
Statement of equity is a summary of changes in share holders equity during the reporting period.
The statemnt includes all changes including issue of new stocks, payment of dividend, issue of
bonus shares, buy back of shares. It also includes changes to retained earnings, reserves and
stock reserve.
Distribution of dividend from net income and transfer of remaining balance to reserves are
shown at the bottom of P&L account.
The remaining balance of profits transferred to reserves are reflected in Statement of changes in
equity as addition to retained earnings.
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Do The statement of stockholders equity explains changes in equity.pdf
1. Do The statement of stockholder's equity explains changes in equity from net income?
Solution
Statement of equity is a summary of changes in share holders equity during the reporting period.
The statemnt includes all changes including issue of new stocks, payment of dividend, issue of
bonus shares, buy back of shares. It also includes changes to retained earnings, reserves and
stock reserve.
Distribution of dividend from net income and transfer of remaining balance to reserves are
shown at the bottom of P&L account.
The remaining balance of profits transferred to reserves are reflected in Statement of changes in
equity as addition to retained earnings.
Hope I have answered the question, for any further clarification please comment.
