The statement that explains the changes in equity and serves as a link between the balance sheet and the income statement is which of the following?
A) Statement of cash flows
B) Statement of changes in equity
C) Operating statement
D) Statement of financial position

Question

Quizplus · Accepted Answer

The statement of changes in equity shows the changes in equity over a period of time and acts as a bridge between the balance sheet and income statement by explaining the changes in equity that occurred during the period. The statement of cash flows shows the inflows and outflows of cash during the period, the operating statement is another term for the income statement, and the statement of financial position is another term for the balance sheet.

The Statement That Explains the Changes in Equity and Serves