Section 1: 30–40%1A4
Statement of Changes in Equity
The statement of changes in equity reconciles the beginning and ending balance of every equity component. The exam tests what goes in each column, how dividends and stock transactions are presented, and how accounting changes flow through retained earnings.
What AICPA Wants You to Know
- 1Identify the five components of stockholders' equity and their normal balances
- 2Prepare or analyze a statement of changes in equity for a period
- 3Explain how net income, OCI, dividends, and stock transactions affect equity components
- 4Apply the accounting for stock dividends vs. stock splits and their equity impact
- 5Record treasury stock purchases and reissuances using the cost method
- 6Identify where prior period adjustments appear in the equity statement