Question

What is the purpose of preparing a statement of stockholders equity on December 31, 2014?

1) To calculate the net income of the company
2) To determine the dividends paid to stockholders
3) To analyze the changes in the company's equity during the year
4) To calculate the market value of the company's stock

Answer 1

The purpose of preparing a statement of stockholder's equity on December 31, 2014, is to analyze the changes in the company's equity during the year.

Step-by-step explanation:

The purpose of preparing a statement of stockholder's equity on December 31, 2014, is 3) to analyze the changes in the company's equity during the year. This statement shows the beginning balance, additions (such as net income and additional investments), subtractions (such as dividends and net losses), and ending balance of the company's equity. It helps stakeholders understand how the company's equity has changed over the years, providing important information about the financial health and performance of the company.