Section 1: 30–40%1A4
Statement of Changes in Equity
Exam insight
Partnership accounting shows up less often than other topics, but when it does it's almost always about allocating income or liquidating. The trap: candidates pay partners in the wrong order during liquidation - safe payments have to follow the right priority sequence. Know your capital account adjustments cold, especially when a partner's balance is in deficit.
CPA Exam Lab is an independent study resource and is not affiliated with, endorsed by, or sponsored by the AICPA® or NASBA. Practice questions are original content created for study purposes. “CPA” is a registered trademark of the AICPA.
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