In preparing a statement of changes in stockholders' equity, the company includes land given to a stockholder as a dividend.This transaction is included in the statement because it represents
A)an investment by an owner that increases equity.
B)an investment by an owner that decreases equity.
C)a distribution to an owner that increases equity.
D)a distribution to an owner that decreases equity.

Question

Quizplus · Accepted Answer

This transaction is considered a distribution to an owner (the stockholder) and it decreases equity because assets (land) are distributed out of the company to the owner, reducing the company's total equity.

In Preparing a Statement of Changes in Stockholders' Equity, the Company