Section 1: 30–40%1A4
Statement of Changes in Equity
Exam Insight
Partnership accounting shows up less frequently than other topics, but when it does, it's almost always about allocating income or liquidating. The trap: candidates apply the wrong order during liquidation - safe payments must go to partners in the right priority sequence. Know your capital account adjustments cold, especially when a partner has a deficit balance.
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What AICPA Wants You to Know
- 1Identify the five components of stockholders' equity and their normal balances
- 2Prepare or analyze a statement of changes in equity for a period
- 3Explain how net income, OCI, dividends, and stock transactions affect equity components
- 4Apply the accounting for stock dividends vs. stock splits and their equity impact
- 5Record treasury stock purchases and reissuances using the cost method
- 6Identify where prior period adjustments appear in the equity statement