STATEMENT OF CHANGES EQUITY

DEFINITION
POINTERS
An equity statement – also referred to as statement of owner’s equity

or statement of changes in equity – is a financial statement that a

company is required to prepare along with other important financial

1. A Statement of Owner's
documents at the end of the financial year. The statement of owner’s
Equity (SOE) shows the
equity reports the changes in company equity. The changes that are
owner's capital at the start
generally reflected in the equity statement include the earned profits, of the period, the changes
dividends, inflow of equity, withdrawal of equity, net loss, and so on. that affect capital, and

the resulting capital at the

WHAT CAUSES CHANGE IN EQUITY? end of the period. It is also

known as "Statement of
When an increase occurs in a company's earnings or capital, the
Changes in Owner's Equity".
overall result is an increase to the company's stockholder's

equity balance. Shareholder's equity may increase from selling

shares of, raising the company's revenues and decreasing its

2.A typical SOE starts with
operating expenses. a heading which consists

of three lines. The first line

Sample of SoCE Format shows the name of the

company; second the title

Statement of Owner's Equity of the report; and third the
shows the changes in the capital
period covered.
account due to contributions,

withdrawals, and net income or

net loss. Capital is increased

by owner's contributions and 
3. The title of the report is
income, and decreased by
Statement of Owner's Equity.
withdrawals and expenses.
This is used for sole propri
The Statement of Owner's Equity,

which is prepared for the sole etorships. For partnerships,

proprietorship type of business, the title used is "Statement

shows the movement in capital
of Partners' Equity" and for
as a result of those four elements.
corporations, "Statement of

Stockholders' Equity".

STEPS ON HOW TO PREPARE SOCE IN SOLE PROPRIETOR

4. The statement starts

with the beginning equity

Gather the needed information balance, and then adds or

subtracts such items

Prepare the heading as profits and dividend pa

yments to arrive at the

ending ending balance.

Capital at the beginning of the period
The general calculation

structure of the statement

Add additional contributions
is:
Beginning equity
Add net income or Minus net loss + Net income –
Dividends +/-
Deduct owner's withdrawal Other changes

= Ending equity
Compute for the ending capital balance