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Does the income statement explain the change in the equity section of a balance sheet?

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تم إضافة السؤال من قبل Abdul Wahab Mohamed Azmy , Chief Accountant , Bahrain Development Centre
تاريخ النشر: 2014/11/27
Hitesh Tanwani
من قبل Hitesh Tanwani , Associate , J P Morgan Chase and Co

The income statement only partly explains the change in equity. There are likely to be some other reasons for change in equity as well.Below is the list of a few items which would affect equity in balance sheet

 

    1. Positive net earnings or net income reported on the corporation's income statement.

 

    1. Some positive Other Comprehensive Income items occurred but they are not to be reported on the income statement.

 

    1. Additional shares of stocks were issued in exchange for cash or other assets.

 

  1. Donated capital was received.

Here is a list of items that could cause a decrease in the total amount of a corporation's stockholders' equity:

 

    1. Negative net earnings or a net loss reported on the corporation's income statement.

 

    1. Some negative Other Comprehensive Income items occurred but they are not to be reported the income statement.

 

  1. The corporation declared cash dividends

Aly Farouk Zamzam, (CMA)
من قبل Aly Farouk Zamzam, (CMA) , Accounting Manager , F.M.S Trading

yes because the Net profit/ loss is transferred to the retained earnings section which we do consider one of the major categories of equity.

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