Answered: A statement of owner's equity shows…

Auditing: A Risk Based-Approach to Conducting a Quality Audit

10th Edition

ISBN:9781305080577

Author:Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg

Publisher:Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg

Chapter16: Advanced Topics Concerning Complex Auditing Judgments

Section: Chapter Questions

Problem 15MCQ

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A statement of owner's equity shows everything that affects the:

a.Cash balance.

b.liability account balances.

c.Capital balance.

d.asset account balances.

Expert Solution

Step 1

An equity statement – also referred to as a statement of owner’s equity or statement of changes in equity – is a financial statement that a company is required to prepare along with other important financial documents at the end of a reporting period. In the United States, the statement of changes in equity is also called the statement of retained earnings.

The statement of owner’s equity reports the changes in company equity. The changes that are generally reflected in the equity statement include the earned profits, dividends, inflow of equity, withdrawal of equity, net loss, and so on.

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