STATEMENT OF CHANGES

IN OWNER’S EQUITY
The Statement of Changes in Owner’s
Equity (SCE)

 It shows the changes in the Capital or

Owner’s Equity as a result of additional
investment or withdrawals by the owner,
plus or minus the net income or net loss
for the year.
Accounts of the Owner’s Equity Section

 Capital – an account bearing the name

of the owner representing the original
and additional investment of the owner
of the business increased by the amount
of net income earned during the year.
 It is decreased by the cash or other assets
withdrawn by the owner as well as the net
loss incurred during the year.
Accounts of the Owner’s Equity Section

 Drawing – represents the withdrawals

made by the owner of the business
either in cash or other assets.
Accounts of the Owner’s Equity Section

 Income Summary – a temporary

account used at the end of the
accounting period to close income and
expense accounts.
 The balance of this account shows the net
income or net loss for the period before it is
closed to the capital account.
Statement of Changes in Owner’s Equity
(SCE)

Ren Ren Merchandising

Statement of Changes in Owner’s Equity
For Year Ended December 31, 2017

Ren, Capital, Beginning ₱ 280,000

Add: Additional Investment ₱ 22,200
Net Income 407,800 430,000
Total ₱710,000
Less: Drawings 30,000
Ren, Capital, End ₱ 680,000

*** The ending capital of ₱ 680,000 is the owner’s equity in the

Statement of Financial Position.