What financial statement tracks and communicates changes in shareholders' earnings?

The statement that tracks and communicates changes in shareholders' earnings is the statement of owners' equity. This financial statement provides a detailed account of the changes in equity from the beginning to the end of a specific period, reflecting how earnings are retained or distributed among shareholders over time.

It includes components such as share capital, retained earnings, and the effects of any dividends paid out. The statement of owners' equity allows stakeholders to understand how profits are being utilized within the company, whether they are being reinvested back into the business or returned to shareholders, which is a crucial aspect of financial health and corporate governance.

While the other financial statements provide essential information, they serve different purposes. For instance, the statement of cash flows focuses on the cash generated and utilized during a period, the balance sheet provides a snapshot of the company's assets, liabilities, and equity at a specific point in time, and the income statement summarizes revenues and expenses to show profitability over a period but does not detail changes in equity. Thus, the statement of owners' equity uniquely encapsulates the movement and final position of shareholder earnings within the overall context of equity.