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4 years ago

Which transaction would be reported on a company's Statement of Changes in Equity?

Business

1 answer:

Goshia [24]4 years ago

8 0

Answer:

3. Dividend distribution to shareholders

Explanation:

The type of transaction that would be reported on a company's Statement of Changes in Equity is Dividend distribution to shareholders. The Statement of Changes in Equity is not regarded as part of the Financial Statements of a company but it is usually presented annually as a separate statement.

The Statement of Changes in Equity shows the details about changes in a company's assets, liabilities, and the owner's equity. The Statement of Changes in Equity is necessary because it shows important details about equity reserves that are not usually stated in financial statements. It shows the details about changes in the share capital of the company and the total income and loss of the company and the impact of it on the company, additional money invested into the business and details of the investment done, the dividend distributed and/or paid to shareholders and if there is any change in accounting policy of the company. It will also show the proceeds from any sale made by the company, unlike the financial statements.

Some of the transactions that will be reported in the Statement of Changes in Equity will include

The Net/total profit or loss of the shareholders.

The changes in share capital reserves either increase or decrease.

The dividend distributed and/or paid to shareholders.

Whether there is a change in the accounting policy of the company.

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