Section 1: 30–40%1A4
Statement of Changes in Equity
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.
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