WEEK Preparation of SCE in a

5
single proprietorship
EXPECTATIONS

Great, you finished answering the

questions. You may request your
facilitator to check your work.
Congratulations and keep on
learning!
 LOOKING BACK TO YOUR LESSON

Directions: Match column A with Column B. Write letters only.

Column A Column B
1. Also called a trading business A. Purchase Discount
2. It is the stock at the beginning B. Inventory Beginning
C. Merchandising business
3. A contra purchase account
D. Freight In
4. Sales less cost of sales E. Sales Discount
F. Net Sales
5. Beginning inventory plus net cost
of purchases G. Cost of Sales
H. Net Cost of Purchases
6. Transportation paid by the company
I. Cost of goods available for sale
to their suppliers
J. Gross Profit
7. Sales less contra sales account
8. Cost of goods available for sale less ending inventory
9. Net purchases plus freight in

10. A contra sales account

BRIEF INTRODUCTION

The statement of changes in equity shows the movement of equity

account during the period. Whether it increases or decreases at the end of the
accounting period. In this module you have to recall what increases and
decreases owner’s equity account.

Increases owner ’s equity account are: Decreases owner ’s equity account are:
a. Additional investment a. Drawing
b. Profit b. Loss
 Learning Module for Accountancy, Business and Management

Forms of Business and their owner’s as presented in the equity account

Forms of Business Owner/s

1. Single Proprietorship Proprietor

2. Partnership Partners

3. Corporation Shareholders

4. Cooperative Members

The objective of this module is to prepare the statement of changes in equity

of a single proprietorship business.

Parts of Statement of Changes in Owner’s Equity

a. Heading
b. Increases to Equity
i. Net income for the year
ii. Additional investment
c. Decreases to Equity
i. Net loss for the year
ii. Withdrawals by the owner

Format of SCE if the business has a net income

 STEP MIN TUTORIAL SERVICES
STATEMENT OF CHANGES IN OWNER’S EQUITY HEADING
For the year ended December 31, 2019

Capital, January 31, 2019 P 100,000 INCREASES

EQUITY
Additional Investment 50,000
Total P 150,000
Less: Drawing P25,000 DECREASES
Net Loss 25,000 50.000 EQUITY
Capital, December 31, 2019 P100,000

Shown above is an example of SCE with a negative result of

operation. The net loss is added to drawing account and the effect, it
decreases the owner’s equity account.

ACTIVITIES

Activity 1.

Directions: Write the Correct answer on the space provided before the number.
____ _____ 1. A business organization owned by only one owner.
_________ 2. Two or more persons combine their property and industry
_________ 3. Has a legal entity entered by the operation of law.
_________ 4. Includes company name, the statement of equity and the date
_________ 5. The first investment made by the business.
_________ 6. Decreases the equity account because the business withdrew cash
_________ 7. The owner of a single proprietorship business.
__________8. The owners of a partnership business.
__________9. The term for the owner of a corporation.
_________10. Formed in accordance with a cooperative code of the Philippine
 Learning Module for Accountancy, Business and Management

Activity 2.

Directions: Write True if the statement is correct and False if the statement is incorrect.

____________1. Revenue increases owner ’s equity account

____________2. Expenses decrease owner’s equity account
____________3. Liability decreases owner ’s equity account
____________4. Addi tional investment decreases owner’s equity account
____________5. Losses decrease owner’s equity account\
____________6. Beginning capital is capital at the beginning of the period
____________7. Net loss is added to drawing account before it is deducte d to
the capital beginning and additional investment.
____________8. The normal balance of Revenue is credit
____________9. The normal balance of Expenses is debit
___________10. The income amount in the statement of changes in owner ’s
equity is the same amount as the income from the SCI for the same period.

Activity 3.

Directions: Compute for the statement of Changes in Equity. For you to answer the
unknown correctly, try to recall what increases and decreases owner’s equity
account.

Capital Additional Capital

Beginning Investment Drawings Profit Ending

1 50,000.00 25,000.00 7,000.00 85,000.00 1

2 35,000.00 75,000.00 2 (20,000.00) 77,500.00

3 80,000.00 20,000.00 10,000.00 3 105,000.00

4 250,000.00 4 75,000.00 200,000.00 425,000.00

5 5 38,000.00 120,000.00 250,000.00 263,000.00

7
 Learning Module for Accountancy, Business and Management

REMEMBER

The statement of changes in equity shows the movements in owner’s

equity during the period.

The following accounts affect owner’s equity :

(a) Additional investment by the owner (increase);

(b) Drawings by the owner (decrease);
(c) Profit (increase); and
(d) Loss (decrease)

CHECK YOUR UNDERSTANDING

Directions: Solve for the unknown item by recalling what increases and decreases
owner’s account.

1
Capital
Beginning Php90,000 Php265,000 Php530,000 Php288,800

Additional 2
Investment Php150,000 Php120,000 Php180,000 Php100,000
3
Drawings Php138,000 Php50,000 Php75,000. *Php85,000
4
Profit Php120,000 (Php200,000) Php250,000 Php150,000

Capita+ 5
Ending Php217,000 (Php85,000) Php555,000 Php385,000.

POSTTEST

Directions: Prepare a statement of changes in equity. Use your family name as

the company name for the heading.
Date Dec 31, 2019 Date March 31,2020

Initial Investment Php268,000.00 Php150,000.00

 Learning Module for Accountancy, Business and Management

Additional Investment Php125,000.00 Php150,000.00

Owner’s Drawing Php75,000.00 Php80,000.00

Net Profit/(Net Loss) Php200,000.00 (Php130,000.00)

REFLECTIVE LEARNING SHEET

Tito, a 51 year old entrepreneur has

operated his TMAM Transport (Tito Martinez
& Atienza Marie) for over three years now.
On normal days, his grab car earns P2,500
a day. On March 17, however, the
government imposed on enhance community
quarantine or lockdown in Luzon. Only
ECQ private establishments providing basic
necessities were allowed to remain in
business during the quarantine period. Tito
had no income since then up to May 31,
2020.

Tito’s equity decreases, because

transportation was not allowed during the
lockdown. There were some businesses that increase
their equity during pandemic. I want you to write
about what are ways and means to increase owner ’s
equity account in your real life situation.

_________________________________________________________________________

_________________________________________________________________________

__ ______________________________________________________________________

_______________________________________________________________________
 E-SITES

To further explore the concept learned today, you may connect to your
internet and visit the links below if possible:

https://www.accountingcoach.com/onlineaccountingcourse

REFERENCES

Ferrer, R. and Millan, Z. V. (2017). Fundamentals of Accountancy, Business &

Management Part 2. 1st Edition

Valencia, E. G., & Roxas, G. F. (2010). Basic Accounting (3rd ed.). Mandaluyong
City, Philippines: Valencia Educational Supply.

Anastacio, V. (2011). Accounting Essentials 1, Centro Escolar University

Publisher

Acknowledgment
Writer : Ma. Cristina A. Labay, MM
Editor : Isabel A. Gumaru, DBA
Evaluator : Ellaine I. Dela Cruz, DBA

Validators & Reviewers:

Remylinda T. Soriano, EPS
Angelita Z. Modesto, PSDS
George B. Borromeo, PSDS
Layout Artist & Illustrator: Ma. Cristina A. Labay, MM

Management Team :

Maria Magdalena M. Lim, Schools Division Superintendent, Manila

Aida H. Rondilla, Chief Education Supervisor
Lucky S. Carpio, EPS in charge of LRMDS
Lady Hannah C. Gillo, Librarian II, LRMDS
Learning Module for Accountancy, Business and Management
 Learning Module for Accountancy, Business and Management

Name: _________________Grade Level: ____Section: _____Score:_______

Teacher:____________________School:______________________________

Worksheet Week 4

Objective: To be able to acquire the knowledge in the preparation of

Statement of Changes in Equity

Learning Content: To be able to prepare the statement of changes in equity for

the net income and net loss.

Directions: Prepare the Statement of changes in equity with the accounts given
below using your surname as your company name for the period ended
December 31, 2019

Capital beginning Php150,000.00

Additional Investment Php50,000.00
Drawings Php78,000.00
Net Profit Php120,000.00

Capital beginning Php75,000.00

Additional Investment Php25,000.00
Drawings Php15,000.00
(Net Loss) Php20,000.00)