The statement of stockholders' equity explains the change in the retained earnings balance caused by stockholder investments and dividend declarations. True / False.

Answer: False

Explanation:

The statement of changes in equity tells us about changes in equity which can be changed by investments by the shareholders in ordinary shares or preference shares, dividends declared, share of profit retained by the company and purchase of company's own shares for cancellation.

This statement is incorrect because retained earnings are not influenced for the year by the stockholder's investments in equity.