STATEMENT OF

CHANGES IN
EQUITY (SCE)
 STATEMENT OF CHANGES IN
EQUITY – All changes, whether
increases or decreases to the owner’s
interest on the company during the
period are reported here. This
statement is prepared prior to
preparation of the Statement of
Financial Position to be able to obtain
the ending balance of the equity to be
used in the SFP.
 SINGLE/SOLE PROPRIETORSHIP –An entity
whose assets, liabilities, income and expenses are
centered or owned by only one person.

 PARTNERSHIP – An entity whose assets, liabilities,

income and expenses are centered or owned by two or
more persons.

 CORPORATION – An entity whose assets, liabilities,

income and expenses are centered or owned by itself
being a legally separate entity from its owners. Owners
are called shareholders or stockholders of the company
Differentiate the
initial investment
from the additional
investments and
define withdrawals
Initial Investment – The
very first investment of the
owner to the company.
Additional Investment –
Increases to owner’s equity
by adding investments by
the owner
Withdrawals –
Decreases to
owner’s equity by
withdrawing assets
by the owner
 Distribution of Income – When
a company is organized as a
corporation, owners (called
shareholders) do not decrease
equity by way of withdrawal.
Instead, the corporation distributes
the income to the shareholders
based on the shares that they have
(percentage of ownership of the
company)
 The Statement of Changes in Partners’
Equity is used by a partnership instead of
the Statement of Changes in Owner’s Equity.
The differences between the two are as
follows:
 Title – instead of owner’s, partners’ is used to denote
that this is a partnership
 There are two or more owners in a partnership thus,
the changes in the capital account of each partner is
presented
 The net income is divided between partners
(not always equal. Based on the agreement.
Example: 60:40, 40:60, etc.)
 The Statement of Changes in Shareholders’ Equity is used by a
corporation instead of the Statement of Changes in Owner’s
Equity. The differences between the two are as follows:

 Title – instead of owner’s, shareholders’ is used to denote that

this is a corporation
 There are an unlimited number of shareholders but unlike the
partnership, the names of the shareholders are not indicated
here. Instead, the corporation keeps an official list with the
corporate secretary
 The capital account is called share capital (just like owner’s being
shareholders)
 Instead of additional investment, share issuances (happens when
shares are sold to shareholders) increases the share capital of a
corporation
 Instead of withdrawals, distribution of net income to
shareholders decreases the Capital of the corporation.