The statement of owner's equity relates the income statement to the balance sheet by showing how the owner's Capital account changed during the accounting period.

Question

Quizplus · Accepted Answer

The statement of owner's equity is a bridge between the income statement and balance sheet as it explains how the owner's equity (i.e. the capital account) changed during the accounting period. Therefore, the statement of owner's equity connects the income statement's net income/loss to the balance sheet's owner's capital account.

The Statement of Owner's Equity Relates the Income Statement to the Balance