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 shows the beginning balance of the owner's capital account, any additional investments or withdrawals made by the owner, and the net income or loss for the period. This information is then used to calculate the ending balance of the owner's capital account, which appears on the balance sheet as part of the owner's equity section. Therefore, the statement of owner's equity serves as a bridge between the income statement and the balance sheet, and shows how the owner's equity changed over the accounting period.

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