The change in equity from one balance sheet to the next is partially explained by the:
A) Statement of cash flows.
B) Statement of financial position.
C) Income statement.
D) Tax return.

Question

Quizplus · Accepted Answer

The income statement shows the company's revenues, expenses, and net income for a specific period, which contributes to the change in equity between balance sheets. The statement of cash flows shows the company's cash inflows and outflows during the period but does not directly impact equity. The statement of financial position just shows the financial position of the company at a specific point in time. Tax returns are not relevant to the change in equity between two balance sheets.

The Change in Equity from One Balance Sheet to the Next