Fundamentals of ABM2 Statement_of_Changes_in_Equity_with_Visuals.pptx

I hope this can help.

1. Statement of Changes in Equity Understanding Changes in Owner's Equity

2. Learning Objectives • Define Statement of Changes in Equity • Identify the components • Explain the purpose and importance • Interpret a sample statement

3. Definition The Statement of Changes in Equity shows the movement in equity accounts during a period. Includes owner contributions, profits/losses, withdrawals/dividends, and other changes.

4. Purpose • To provide transparency on equity movement • Helps users understand how net income and owner actions affect equity

5. Components • Beginning Equity • Additional Capital/Investment • Net Income or Loss • Withdrawals/Dividends • Other Comprehensive Income • Ending Equity

6. SHARE CAPITAL The amount invested by shareholders in the company.

7. RETAINED EARNINGS The accumulated profits or losses of the company that have not been distributed to shareholders.

8. Sample Format Table Particulars Amount (₱) --------------------------------------------- Beginning Capital 100,000 Add: Additional Investment 20,000 Add: Net Income 50,000 Less: Withdrawals (10,000) Ending Capital 160,000

9. Example: Sole Proprietor • Juan started with ₱100,000 • Invested another ₱20,000 • Earned ₱50,000 net income • Withdrew ₱10,000 for personal use • Ending Equity: ₱160,000

10. Example: Corporation • Includes Share Capital, Retained Earnings, Reserves • More complex with dividends and Other Comprehensive Income (OCI)

11. Importance to Users For owners/investors: track returns For analysts: assess company stability For accountants: summarize changes in equity

12. Quick Review Questions What are the components? Why is the statement important?

13. Summary • Equity changes reflect both performance and owner actions • Statement is a key part of financial reporting

14. Thank You! Questions and Answers

15. Holland Law Firm is owned by Atty. Jude Holland. The balance of Atty. Holland’s capital as of January 1, 2015, is ₱1,800,000.00. During the year, he invested additional cash of ₱450,000.00 in the business. Also, the Holland Law Firm earned ₱168,750.00 of net income. Finally, he withdraws ₱112,500.00.