Question

why do we as professional accountants have to possess the excellent knowledge and skills in how to present and analyze stockholders' equity? explain in detail

Answer 1

The stockholders' equity is designed in an approach to display the financing that has been provided from its owners for the entity. Thus assists the potential investors to know the structure of ownership for particular business. The stockholders' equity is influenced by many components such as share capital, retained earnings and net income & dividends. The stockholders' equity analysis shows how total equity, shares, and ownership changes over time. It involves the reconciliation in the balance sheet's equity section from period-to-period. The specifics of Statements of Shareholder Equity are usually widely varied depending on the approach any individual organisation is organized as it pertains to stock, ownership, paid-in-capital, preferred stock, and how this capital is diluted or increased over time and provides an explanation on what happened to cause any Shareholders’ Equity changes. It is very difficult and complex procedure, thus the professional accountants need to possess the excellent skills and knowledge in how to present and analyze the company’s stockholders' equity