The Statement of Changes in Equity (SoCE) summarizes equity transactions with business owners that occurred during the year. It shows a reconciliation of beginning and ending balances of equity accounts, including owners' capital, partners' capital accounts, and paid-in capital and retained earnings for corporations. The SoCE is prepared to inform readers about movements in equity and meet reporting requirements.

2. How To DoHow To Do
Statement ofStatement of
Changes in Equity?Changes in Equity?
By: Mary Grace M. Mercado

3.  The SoCE is a statement dated “for the year-ended”.
 The report shows a reconciliation of the beginning
and ending balances of the equity accounts.
 It summarizes the equity transactions with the owners
of the business that occurred during the year.
The SoCE is prepared to meet the requirements of the readers
to understand the transactions that cause the movements in
equity accounts.
What Is the Statement of Changes in
Equity (SoCE)?

5. * Sole proprietorship
Forms of Business Organizations
• Partnership
• Corporation
• It is the simplest form of a
business organization.
• There is only one owner
referred to as sole proprietor,
who oftentimes also acts as the
manager.
• The business has no legal
personality separate from its
owner, meaning the business
and the owner is one entity in
the eyes of the law.
• It is a business owned by two or
more owners called partners,
who pool their resources
together such as money,
property, and industry, to
operate a business and divide
the profit among themselves.
• Partners are generally involved
in the management of the
business.
• The agreement of the partners
is stated in the contract of
partnership. Most importantly,
it emphasizes the partners’
profit and loss sharing.
• It is the most complex form of
business organization.
• It is owned by many owners
called stockholders or
shareholders.
• Ownership is divided into
common stocks or shares of
stocks. One shareholder can
own many stocks.
• One of its characteristics is the
separation of ownership and
management. Shareholders
invest their funds but are not
normally involved in the day-to
day-operations. Rather, the
corporation is managed by
professional managers.

6. 1. Sole proprietorship
Preparation of SoCE
Owner’s Capital AccountOwner’s Capital Account
Juan Dela Cruz

10. 1. Sole proprietorship
Preparation of SoCE
SoCE Sole Proprietorship‒SoCE Sole Proprietorship‒

11. Preparation of SoCE
1. Sole proprietorship

13. 2. Partnership
Preparation of SoCE
Each partner’s Capital account will track his/her:
• contributions to the business;
• share in the net income; and
• drawings.

16. Preparation of SoCE
2. Partnership

18. 3. Corporation
Preparation of SoCE
Paid in Capital
Retained Earnings

19. Preparation of SoCE
3. Corporation
SoCE Corporation‒SoCE Corporation‒

20. Preparation of SoCE
3. Corporation

21. Preparation of SoCE
3. Corporation