Republic of the Philippines

Department of Education
National Capital Region
DIVISION OF CITY SCHOOLS – MANILA
Manila Education Center Arroceros Forest Park
Antonio J. Villegas St. Ermita, Manila

FABM2

Quarter 1 Week 4 Module 4

Learning Competency:
Prepare Statement of Changes
in Equity of a Single Proprietorship
ABM_FABM12-Ie-9
 Learning Module for Accountancy, Business and
Management

HOW TO USE THIS MODULE?

Before starting the module, I want you to set aside other task/s that may
disturb you while enjoying the lessons. Read the simple instructions below to
successfully enjoy the objectives of this kit. Have fun!

1. Follow carefully all the contents and instructions indicated in

every page of this module.

2. Write on your notebook the concepts about the lessons. Writing

enhances learning that is important to develop and keep in mind.

3. Perform all the provided activities in the module.

4. Let your facilitator/guardian assess your answers using the

answer key card.

5. Analyze conceptually the posttest and apply what you have

learned.

6. Enjoy studying!

PARTS OF THE MODULE

Expectations - These are what you will be able to know after

completing the lessons in the module.

Pre-test - This will measure your prior knowledge and the concepts to
be mastered throughout the lesson.

Looking Back to your Lesson - This section will measure what learnings
and skills did you understand from the previous lesson.
Brief Introduction- This section will give you an overview of the
lesson.
Activities - This is a set of activities you will perform with a partner.
Remember - This section summarizes the concepts and applications of
the lessons.
Check your Understanding - It will verify how you learned from the
lesson.
 Learning Module for Accountancy, Business and Management

Post-test - This will measure how much you have learned from the entire
module

LESSON
Preparation of SCE in a
4 single proprietorship
EXPECTATIONS

You will represent real-life situations using statement of changes in equity

Specifically, this module will help you:

❖ prepare a statement of changes in equity for a single proprietorship

business.

PRETEST

Directions: Draw sign if the account increases owner’s

equity, sign if it
decreases owner’s equity account and sign If no effect in a yellow paper.

Let us start your

journey in learning more on SCE I am sure you are ready and excited to answer the Pretest. Enjoy
answering!

1. Initial investment 11. Professional Fees

2. Rent expense 12. Transportation Expense

3. Service revenue 13. Rental Revenue

4. Capital 14. Payment of Liability

5. Drawing 15. Supplies

 Learning Module for Accountancy, Business and
Management

6. Salaries 16. Equipment

7. Additional investment 17. Depreciation Expense

8. Cost of Goods Sold 18. Land

9. Accounts Payable 19. Prepaid Expenses

10. Allowance for Bad Debts 20. Withdrawals

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
Beginning inventory plus net cost F. Net Sales
5.
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

 Learning Module for Accountancy, Business and Management

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

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
4
 Learning Module for Accountancy, Business and Management

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

 Learning Module for Accountancy, Business and Management

5
Learning Module for Accountancy, Business and Management

Format of SCE if the business resulted to a net loss

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 equi ty 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

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.
 Learning Module for Accountancy, Business and Management

____________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
 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

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)