The document discusses the statement of changes in equity (SCE), including its purpose of reporting changes in equity over an accounting period. It defines key elements of the SCE for sole proprietorships, partnerships, and corporations. These include initial investment, additional investment, withdrawals, revenues, expenses, assets, and liabilities. Examples are provided of how to prepare the heading and sections for increases and decreases to equity on an SCE. Practice problems are included at the end to test comprehension.

1. STATEMENT OF
CHANGES IN EQUITY
(SCE)

2. A. Communicate learning objectives At the end of the
topic, I should be able to
1. Identify the elements of the SCE and describe each of
these items;
2. Differenciate the SCE of Sole Propreitorship,
partnership and Corporation;
3. Prepare an SCE of a Sole Proprietorship .

3.  Ask the learners to give specific account titles for each of the
terms above and give examples of service businesses and
merchandising businesses
a. Revenues – service income, sales
b. Expenses – salaries expense, depreciation expense
c. Income – revenues less expenses (amount found at the
bottom of the SCI)
d. Assets – inventories, prepaid expenses, property, plant and
equipment
e. Liabilities – accounts payable, unearned income, long-term
debt,

4. Discuss the importance of the SCE:
The statement of owner's equity is a financial
statement that reports the changes in the
equity section of the balance sheet during an
accounting period. In other words,
it reports the events that increased or
decreased stockholder's equity over the course
of the accounting period.

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

6. SINGLE/SOLE PROPRIETORSHIP –An entity whose assets,
liabilities, income and expenses are centered or owned by
only one person (Haddock, Price, & Farina, 2012).
PARTNERSHIP – An entity whose assets, liabilities, income
and expenses are centered or owned by two or more persons
(Haddock, Price, & Farina, 2012).
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(Haddock, Price,
& Farina, 2012).

11. 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(Haddock, Price, & Farina, 2012).
Withdrawals –Decreases to owner’s equity by
withdrawing assets by the owner (Haddock, Price, &
Farina, 2012).

12. a. Heading
i. Name of the Company
ii. Name of the Statement
iii. Date of preparation (emphasis on the wording – “for the”)
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

16. 1. Which form of business organization is owned by only one
person?
2. Increases in owner’s equity without additional investment.
3. Decreases to owner’s equity apart from net effect of revenues
and expenses.
4. Beginning owner’s equity amounted to P 300,000. Net loss for
the year totaled P 45,000. No additional investments and
withdrawals for the period. Compute for total increase in equity for
the year.
5. Ending owner’s equity amounted to P70,000. Additional
investments during the year amounted to P30,000. Withdrawals
totaled P50,000. Compute for the company’s net income for the
year assuming beginning equity is P10,000.

17. 1. Owner, Juan invested an initial capital amounting
P50,000 in order to put up his janitorial services
company. During the first year of operations (2016),
the company had a loss of P25,000. Because of this,
Juan invested additional capital amounting to P50,000
in 2017. In the second year (2017), the company had a
net income of P100,000 and Juan withdrew P10,000
for personal use. Compute for the ending capital
balance of Juan for the year 2017.

18. 2. Owner Juana invested P100,000 to start her
laundry business. During the first year of
operations (2016), the company had a net income
of P15,000. Juana invested additional P100,000 to
grow the business. In 2017, the business earned
P50,000. As of December 31, 2017, Juana’s
capital balance is P200,000. How much is Juana’s
withdrawal)?

19.  3. 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 Prepare the Statement of
Changes in Equity .

21. THANK YOU