Question

An accounting report that shows the changes in capital during the accounting period is:

a.) a balance sheet.
b.) an income statement.
c.) a statement of owner's equity.
d.) All of these answers are correct.

Answer 1

The Balance sheet does not normally show changes in capital during the period unless you have two years shown, and then only the gross value of the change is shown not the individual components of the change.

The Income Statement shows only items of income and expense and the difference between the two. It may show changes in capital but only if the title includes the caption "and changes in retained earnings" b;ut again only the changes in retained earning are shown, not all changes in equity.

Therefore the Statement of Owner's equity is the only statement which reconciles the beginning balance of owner's equity with the ending balance for the period then ended. It shows all catagories of changes in equity.

Answer 2

All of the above