Which document records the change in owners' equity from the end of one fiscal period to the end of the next?

• A. Equity
• B. Income Statement
• C. Balance Sheet
• D. Statement of Owner's Equity

Answer: (D)

Tracking how owners' equity changes over a period is shown in the Statement of Owner's Equity. This statement starts with the beginning balance of owners' equity, then adds items that increase equity (such as additional investments by owners and net income for the period) and subtracts items that decrease equity (like withdrawals or draws and net losses). The result is the ending balance of owners' equity, which ties into the balance sheet at period end. The balance sheet itself is a snapshot of financial position at a single date, not the activity that occurred over the period. The income statement reports revenues and expenses to determine net income but does not present the changes in owners' equity over the period by itself. A generic “Equity” document isn’t a standard financial statement.