FUNDAMENTALS OF ACCOUNTING AND BUSINESS MANAGEMENT 2

LESSON 3:
STATEMENT OF
CHANGES IN
EQUITY(SCE)
Sept. 13, 2021
Prepared By: Maureen A. Acob
 LEARNING OBJECTIVES

• Reflect on the importance of preparing the SCE

• Reflect on the differences among a single/sole proprietorship,

partnership and corporation

• Reflect on the use of capital and drawing accounts

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STATEMENT OF
CHANGES IN EQUITY
(SCE)
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What is SCE?

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. (Haddock, Price, & Farina,
2012).

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 FORMS OF BUSINESS

SINGLE/SOLE PARTNERSHIP CORPORATION

PROPRIETORSHIP.
An entity whose assets,
An entity whose assets, An entity whose assets, liabilities, income and
expenses are centered or
liabilities, income and owned by itself being a
liabilities, income and expenses are centered or legally separate entity
owned by two or more from its owners. Owners
expenses are centered or are called shareholders
persons . or stockholders of the
owned by only one person. company

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STATEMENT OF CHANGES IN EQUITY (SOLE
PROPRIETORSHIP)

ABM COMPANY
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED DECEMBER 31, 2016

Owner*, Capital, January 1, 2016 P100,000

Add:
Net income for the year 2016 P50,000
Additional investment 25,000 75,000
Sub-total P175,000
Less:
Withdrawals for the year (30,000)
Owner*, Capital, December 31, 2016 P145,000

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 HEADING
ABM COMPANY
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED DECEMBER 31, 2016

Owner*, Capital, January 1, 2016 P100,000

Add:
Net income for the year 2016 50,000
Additional investment 25,000 75,000
Sub-total P175,000
Less:
Withdrawals for the year 30,000
Owner*, Capital, December 31, 2016 P145,000

** INCREASES TO EQUITY
*** DECREASES TO EQUITY
Reference:
https://www.accountingcoach.com/in 7
come-statement/explanation/3
STATEMENT OF CHANGES IN PARTNERS’ EQUITY
HEADING
ABM COMPANY
STATEMENT OF CHANGES IN PARTNERS’ EQUITY
FOR THE YEAR ENDED DECEMBER 31, 2016
Partner A Partner B Partner C
Total Capital, January 1, 2016 P 100,000 P 150,000 P
250,000
Add: Net Income 2016 25,000 25,000
50,000
Additional Investment 50,000 20,000
70,000
Sub-total P 175,000 P 195,000 P
370,000
Less: Withdrawals 100,000 100,000
200,000
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Capital, December 31, 2016 P 75,000 P 95,000 P
 STATEMENT OF CHANGES IN EQUITY
(CORPORATION)
HEADING
ABM COMPANY
STATEMENT OF CHANGES IN PARTNERS’ EQUITY
FOR THE YEAR ENDED DECEMBER 31, 2016
Capital, January 1, 2016 P 1,000,000.00
Share Issuance 500,000
Net Income 2016 150,000
Distribution of Income (100,000)
Capital, December 31, 2016 P 1,550,000

**INCREASES TO EQUITY
***DECREASES TO EQUITY

Reference:
https://www.accountingcoach.com/in 9
come-statement/explanation/4
▰ QUIZ 5
▰ I. The following balances were retrieved from the records of Juan’s Janitorial
Services for the year ended December 31, 2016:

▰ Capital, January 1, 2016 P 500,000

▰ Withdrawals 100,000

▰ Additional Investments 50,000

▰ Net Loss 45,000

▰ REQUIRED: Prepare the Statement of Changes in Equity suggested.

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▰ II. List down the different parts of the Statement of Changes in Equity

▰ a. Heading

▰ (1) i. ___________________________

▰ (2) ii. ___________________________

▰ (3) iii. ___________________________

▰ b. Increases in Equity

▰ (4) i. ____________________________

▰ (5) ii. ____________________________

▰
▰ c. Decreases in Equity

▰ (6) i. _____________________________
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▰ DEFERRED EXPENSE – ASSET- PREPAID ASSET EX. PREPAID
INSURANCE

▰ DEFERRED REVENUE- LIABILITY –UNEARNED REVENUE

▰ ACCRUED EXPENSE- LIABILITY-ACCOUNTS PAYABLE (A/P)

▰ ACCRUED REVENUE- ASSET- ACOOUNTS RECEIVABLE(A/R)

▰ DEFERRAL VS. ACCRUAL

▰ DOLLARS B4 ACTION ACTION BEFORE DOLLARS
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