Answer:
3. Describes changes in paid-in capital and retained earnings subcategories
Explanation:
The statement of changes in equity actually tells the users about the status of owner’s equity at the beginning of the financial period, how it has changed during the year and the status of equity at the end of the period.
A statement of changes in equity shows for each component of equity the amount at the beginning of the period, changes during the period, and its amount at the end of the period.The component of equity normally includes retained earnings, share capital etc.
So based on the above discussion
Statement No.1 is incorrect because the statement of retained earnings is part of statement of changes in equity not other way around.
Statement No.2 is also incorrect because statement of changes in equity also shows opening balance and changes during the period.
Statement No.3 is correct because statement of changes in equity shows changes in paid up capital and retained earnings.
Statement No.4 is incorrect because statement of changes in equity include changes in treasury stock
so based on the above discussion, the answer is 3. Describes changes in paid-in capital and retained earnings subcategories
