Final answer:
The incorrect statement regarding the statement of stockholders' equity is that retained earnings are not included, which is false as retained earnings are typically part of this financial statement. This statement outlines changes in common stock, retained earnings, and reflects the total equity of a company, including any capital gains or losses and dividends paid.
Step-by-step explanation:
The incorrect statement regarding the statement of stockholders' equity is option c) 'Retained earnings is not included.' The statement of stockholders' equity usually includes changes in retained earnings, common stock, and other equity items. Retained earnings are a critical component as they represent the cumulative amount of a company's earnings that have been retained within the company rather than paid out as dividends.
A share of stock represents a unit of ownership in a corporation and a claim on a part of the corporation's assets and earnings. Firms receive money from a stock sale in their initial public offering (IPO) or subsequent offerings; they do not receive money when shares are traded between investors on the stock exchange. A dividend is a payment made by a corporation to its shareholders, usually as a distribution of profits. A capital gain is an increase in the value of a capital asset, such as stock, that gives it a higher worth than the purchase price.