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© 2014 Cengage Learning. All Rights Reserved. Learning Objective © 2014 Cengage Learning. All Rights Reserved. LO2Prepare a statement of stockholders’

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Presentation on theme: "© 2014 Cengage Learning. All Rights Reserved. Learning Objective © 2014 Cengage Learning. All Rights Reserved. LO2Prepare a statement of stockholders’"— Presentation transcript:

1 © 2014 Cengage Learning. All Rights Reserved. Learning Objective © 2014 Cengage Learning. All Rights Reserved. LO2Prepare a statement of stockholders’ equity for a business organized as a corporation.

2 © 2014 Cengage Learning. All Rights Reserved. Stockholders’ Equity Information ●A financial statement that shows changes in a corporation’s ownership for a fiscal period is called a statement of stockholders’ equity. SLIDE 2 LO2 Lesson 16-2

3 © 2014 Cengage Learning. All Rights Reserved. Stockholders’ Equity Information SLIDE 3 LO2 Lesson 16-2

4 © 2014 Cengage Learning. All Rights Reserved. Capital Stock Section of the Statement of Stockholders’ Equity ●A value assigned to a share of stock and printed on the stock certificate is called par value. ●When issuing shares of stock, a corporation can assign any par value allowed by laws in the state in which it incorporates. SLIDE 4 LO2 Lesson 16-2

5 © 2014 Cengage Learning. All Rights Reserved. Capital Stock Section of the Statement of Stockholders’ Equity SLIDE 5 LO2 Lesson 16-2 Capital Stock Section 2 2 Heading 1 1 Stock Issued During the Year 4 4 Total Stock Issued 5 5 Stock at Beginning of Year 3 3

6 © 2014 Cengage Learning. All Rights Reserved. Retained Earnings Section of the Statement of Stockholders’ Equity SLIDE 6 LO2 Lesson 16-2 Increase in Retained Earnings 5 5 Retained Earnings Section 1 1 Net Income after Federal Income Tax 3 3 Ending Balance 6 6 Total Stockholders’ Equity 7 7 Beginning Balance 2 2 Dividends Declared 4 4

7 © 2014 Cengage Learning. All Rights Reserved. Lesson 16-2 Audit Your Understanding 1.What financial information does a statement of stockholders’ equity report? SLIDE 7 ANSWER The changes in a corporation’s ownership for a fiscal period Lesson 16-2

8 © 2014 Cengage Learning. All Rights Reserved. Lesson 16-2 Audit Your Understanding 2.What are the two major sections of a statement of stockholders’ equity? SLIDE 8 ANSWER Capital Stock and Retained Earnings Lesson 16-2

9 © 2014 Cengage Learning. All Rights Reserved. Lesson 16-2 Audit Your Understanding 3.Where is the information found to prepare the Capital Stock section of a statement of stockholders’ equity? SLIDE 9 ANSWER In the Capital Stock general ledger account Lesson 16-2

10 © 2014 Cengage Learning. All Rights Reserved. Lesson 16-2 Audit Your Understanding 4.Where is the beginning balance of retained earnings found? SLIDE 10 ANSWER The Retained Earnings amount on the unadjusted trial balance Lesson 16-2

11 © 2014 Cengage Learning. All Rights Reserved. Lesson 16-2 Audit Your Understanding 5.When issuing shares of stock, what par value can a corporation assign to each share? SLIDE 11 ANSWER A corporation can assign any par value allowed by laws in the state in which it incorporates. Lesson 16-2

12 © 2014 Cengage Learning. All Rights Reserved. Lesson 16-2 Audit Your Understanding 6.Where is net income after federal income taxes found? SLIDE 12 ANSWER The income statement Lesson 16-2


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