Q: I've seen distributions reported in equity as cumulative amounts. Why would this be done and is there an advantage in doing it that way?
A: This is an interesting approach. By reporting distributions as a cumulative balance within the equity section of the balance sheet as a negative amount, the financial statements clearly show the impact distributions have over time on retained earnings and net worth. It would be helpful if this practice were more common.
Course overview: Financial Statement Review and Ratio Analysis