Final answer:
In a Statement of Changes in AOCI, items such as unrealized gains and losses on investments, foreign currency translation adjustments, and pension plan gains and losses are subtracted or added, unlike dividends in the Statement of R/E. These reflect fair value changes not recognized in net income but affecting equity.
Step-by-step explanation:
In accounting, a Statement of Changes in Accumulated Other Comprehensive Income (AOCI) is indeed akin to a Statement of Retained Earnings (R/E), but it reflects changes in equity for items not routed through the income statement. In a Statement of Changes in AOCI, rather than subtracting dividends from the beginning balance as in the Statement of Retained Earnings, items such as unrealized gains and losses on certain types of investments, foreign currency translation adjustments, and pension plan gains and losses are subtracted or added to the beginning balance of AOCI.
These items represent the components of comprehensive income that do not affect net income but still impact shareholder's equity. They reflect changes in the fair value of certain assets and obligations that, according to accounting standards, are reported outside the income statement until they are realized. The AOCI is therefore a crucial component of the equity section of the balance sheet and provides useful information to stakeholders about other aspects of an entity's financial health.