Answer:
3. Dividend distribution to shareholders
Explanation:
The type of transaction that would be reported on a company's Statement of Changes in Equity is Dividend distribution to shareholders. The Statement of Changes in Equity is not regarded as part of the Financial Statements of a company but it is usually presented annually as a separate statement.
The Statement of Changes in Equity shows the details about changes in a company's assets, liabilities, and the owner's equity. The Statement of Changes in Equity is necessary because it shows important details about equity reserves that are not usually stated in financial statements. It shows the details about changes in the share capital of the company and the total income and loss of the company and the impact of it on the company, additional money invested into the business and details of the investment done, the dividend distributed and/or paid to shareholders and if there is any change in accounting policy of the company. It will also show the proceeds from any sale made by the company, unlike the financial statements.
Some of the transactions that will be reported in the Statement of Changes in Equity will include
The Net/total profit or loss of the shareholders.
The changes in share capital reserves either increase or decrease.
The dividend distributed and/or paid to shareholders.
Whether there is a change in the accounting policy of the company.
The transaction which would be reported on a company's Statement of Changes in Equity is: 3. Dividend distribution to shareholders.
Stockholders' equity refers to an amount of assets remaining or the residual interest of assets remaining in a business after all its liabilities are settled or deducted.
Hence, stockholders' equity is typically calculated by deducting (subtracting) the value of liabilities from the value of assets on the balance sheet of a business organization.
Mathematically, stockholders' equity is given by the formula;
[tex]Shareholder's \; equity = Total \;assets - Total\; liabilities[/tex]
The two (2) main sources through which stockholders' equity is generated include:
A Statement of Changes in stockholders' equity is a financial statement that depict or illustrate a summary of the changes in shareholders' equity such as gains and losses that respectively increase or decrease stockholders' equity, over a particular reporting period.
In conclusion, the dividend distribution to shareholders is a type of financial transaction which must be be reported on a company's Statement of Changes in Equity.
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