The statement of shareholders' equity is prepared:
A) before the preparation of the income statement.
B) after the preparation of the statement of cash flows.
C) before the preparation of the balance sheet.
D) after the audit of the financial statements.

Question

Quizplus · Accepted Answer

The statement of shareholders' equity shows the changes in the shareholders' equity for a given period of time. It is typically prepared before the balance sheet since it provides information on the changes that have occurred in the shareholders' equity accounts (such as common stock, retained earnings, and additional paid-in capital) during the period covered by the financial statements.

The Statement of Shareholders' Equity Is Prepared