A company may prepare a statement of retained earnings instead of a statement of stockholders' equity if the only changes in the stockholders' equity accounts that occurred during the year are earnings and dividends.

Question

Quizplus · Accepted Answer

A statement of retained earnings is prepared when there are only changes in the retained earnings account due to earnings and dividends. If there are other changes in the stockholders' equity accounts, such as stock issuances, repurchases, or stock-based compensation, then a statement of stockholders' equity is prepared.

A Company May Prepare a Statement of Retained Earnings Instead