When should the Statement of Stockholder Equity equation be used?

The Statement of Stockholder Equity equation is particularly relevant when there is a need to understand the changes in a company's equity over a specific period, especially in relation to Retained Earnings. This section of the financial statements provides crucial insights into how profit or loss from operations affects equity, along with any additional contributions or withdrawals by shareholders.

In cases where there is limited or no information about Retained Earnings, utilizing the Statement of Stockholder Equity equation becomes essential. This is because the equation details how financial operations impact the stockholder's equity directly, helping to provide clarity on the equity section of the balance sheet. It captures transactions such as net income, dividends declared, and any stock issuances or repurchases, which are all factors contributing to a thorough understanding of equity.

The other options do not align with the specific application of the Statement of Stockholder Equity equation. For instance, total assets involve the balance sheet equation rather than equity; cash flow statements focus on cash-related transactions, and assessing liabilities pertains more to the liabilities section of the balance sheet rather than stockholder equity. Thus, the context of Retained Earnings is pivotal in understanding when this equation is applied.