The Statement of Stockholders' Equity

question 105

Multiple Choice

The statement of stockholders' equity:

• A)Is a required financial statement.
• B)May be issued as a substitute for the statement of retained earnings.
• C)Shows the changes during the year in all stockholders' equity accounts except retained earnings.
• D)Is a statement sent to each stockholder showing that person's return on equity.

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Definitions:

Operating Assets

Assets that a business uses for its day-to-day operational activities to generate revenue, excluding investment and non-operational assets.

Return on Investment

A financial ratio that calculates the profitability of an investment by dividing the net profit by the initial cost of the investment.

Controllable Margin

The portion of profit or income that a manager can directly influence by controlling costs or increasing sales.

Invested Capital

Funds invested in a company by the shareholders and lenders, used for the purchase of assets and operation of the company, aiming for business growth and profitability.