Lesson 16-2

Lesson 16-2

By Heather Failla

Preparing a Statement of Stockholder's Equity

Lesson 16-1 was how to prepare an Income Statement, today we will focus on the Statement of Stockholder's Equity

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Some text here about the topic of discussion

Stockholders' Equity Information

To prepare: info from several sources:

1. Current Year's Income Statement

   1. summarizes the change in retained earnings

2. ​ General Ledger

   1. provides beginning balance / activity​

3. ​Adjusted Trial Balance

   1. provides current balances

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Multiple Choice

To obtain the current balances, which source would you refer to?

• The current year's income statement

• The general ledger

• The adjusted trial balance

There are two major sections:

1. Capital Stock

2. Retained Earnings

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Term to Know

Par Value

A value assigned to a share of stock and printed on the stock certificate.

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*When issuing shares of stock, a corporation can assign any par value allowed by laws in the state in which it incorporates.​

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Quick check on your terms to know

Multiple Choice

The operating revenue remaining after cost of merchandise sold has been deducted is . . .

• gross profit

• cost of mdse. sold

• net sales

• total sales

Multiple Choice

A financial statement that reports the amount of dividends is

• an income statement

• a balance sheet

• a statement of stockholders' equity

• none of these

Multiple Choice

The financial statement that reports the par value of the stock is

• an income statement

• a balance sheet

• a statement of stockholders' equity

• none of these

Retained Earnings

Retained earnings section is prepared using amounts on the

​1. Adjusted Trial Balance

• beginning balance of retained earnings

• amount of dividends declared

​2. Income Statement

• Net Income after federal income taxes