Which of the following best describes what the statement of stockholders' equity reports?

• A. Changes in the components of stockholders' equity during a specific period
• B. The cash inflows and outflows from operating, investing, and financing activities
• C. The financial position of a company at a specific point in time
• D. The revenues and expenses of a company over a period of time

Answer: (A)

Verified step by step guidance

1. Step 1: Understand the purpose of the statement of stockholders' equity. It is a financial statement that provides details about changes in the components of stockholders' equity during a specific period, such as common stock, retained earnings, and additional paid-in capital.
2. Step 2: Compare the statement of stockholders' equity to other financial statements. For example, the cash flow statement reports cash inflows and outflows from operating, investing, and financing activities, while the balance sheet shows the financial position of a company at a specific point in time, and the income statement reports revenues and expenses over a period of time.
3. Step 3: Identify the correct description from the options provided. The statement of stockholders' equity specifically focuses on changes in equity components, not cash flows, financial position, or revenues and expenses.
4. Step 4: Relate the statement of stockholders' equity to its components. It includes items such as issuance of stock, repurchase of stock, dividends paid, and net income, which affect retained earnings and other equity accounts.
5. Step 5: Conclude that the correct answer is: 'Changes in the components of stockholders' equity during a specific period,' as this aligns with the purpose and content of the statement of stockholders' equity.