Question

select all that apply

which of the following line items would be found on a statement of stockholders equity that would not be on the statement of retained earnings?

• net income
• common stock
• dividends
• treasury stock
• dividends payable
• additional paid-in capital

Explanation:

Compare statement scopes

Using the Financial Statement Presentation knowledge point, the Statement of Stockholders' Equity is a comprehensive financial statement that reports the changes in all stockholders' equity accounts, including Common Stock, Additional Paid-in Capital, Retained Earnings, and Treasury Stock. In contrast, the Statement of Retained Earnings focuses exclusively on the changes in the Retained Earnings balance during the period.

Analyze Retained Earnings items

Using the Retained Earnings Definition knowledge point, the Statement of Retained Earnings reconciles the beginning and ending balances of retained earnings. The formula is:

$$ \text{Ending Retained Earnings} = \text{Beginning Retained Earnings} + \text{Net Income} - \text{Dividends} $$

Therefore, Net Income and Dividends are both found on the Statement of Retained Earnings (and consequently also appear in the Retained Earnings column of the Statement of Stockholders' Equity). Dividends Payable is a liability account found on the Balance Sheet, not on either equity statement.

Identify non-retained earnings equity items

Using the Treasury Stock and Paid-in Capital knowledge points, items representing other components of equity are not reported on the Statement of Retained Earnings. These include:

• Common Stock (contributed capital)
• Treasury Stock (contra-equity)
• Additional Paid-in Capital (contributed capital in excess of par)

These three line items are found on the Statement of Stockholders' Equity but would not be on the Statement of Retained Earnings.

Answer:

• Net Income
• Common Stock (Correct answer)
• Dividends
• Treasury Stock (Correct answer)
• Dividends Payable
• Additional Paid-in Capital (Correct answer)