Changes in Equity or Statement of Retained Earnings

Shareholders' equity represents the amount by which a company is financed through common and preferred shares. A firm's total assets minus its total liabilities. Equivalently, it is share capital plus retained earnings minus treasury shares.

Shareholders Equity Contain Followings

• Common Shares
• Preferred Shares
• Retain Earning

Changes in the above indicated balance that define as changes in Equity, changes can be take place due to

• Net Profit or Loss
• Dividend payment
• Prior year adjustment
• Issue or Recall of Common Stock
• Issue or Recall of Preferred Shares
• Error correction – if error occurred in the past and is large then the financial statements of the previous year has to be corrected, which is done by re-stating the amounts in the financial statements. The re-statement may cause the net income amount from the previous year to be different than what was originally reported. The amount of the difference in Net Income is highlighted on the Statement of Retained Earnings.
  ALSO – reported Net of Tax.
• Changes in Accounting Policy – applied retroactively