Statement of Stockholders Equity

FAR tests this as a roll-forward: from a beginning balance plus period events, solve for the ending balance of one column or of total equity. The “tell” is that only non-owner changes (net income, OCI) and owner transactions (dividends declared, stock issued, treasury purchases) move equity — declaring a dividend reduces retained earnings on the declaration date, while paying it later only settles the liability, and prior-period error corrections adjust beginning retained earnings, net of tax (ASC 250), not current income. Watch treasury stock: under the cost method it is a contra-equity deduction, and resales above cost credit APIC, never a gain.

The classic trap is mixing up statements. The balance sheet reports equity at a point in time; this statement explains the movement between two snapshots. And while comprehensive income measures the OCI flow, its accumulated balance (AOCI) is its own component here, separate from retained earnings. Memory hook: every dollar moving equity is an owner putting money in or taking it out, or earnings — nothing else.