Statement of Owners Equity
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Income Statement Example
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Balance Sheet Example
The statement of owners equity is the second report of the financial statements. Its full name is the statement of changes in the owners equity.This accounting report shows all the changes to the
owners equity
that have occurred during the period. These changes comprise capital,
drawings
and the
profit
for the period. Just like the
income statement,
this statement normally covers a twelve-month period. The format of the statement is shown below:
As you can see, it shows the balances of the
owners equity
at the beginning and end of the period in addition to the changes that occurred during this period.Here is the trial balance for George's Catering, the business we were using in previous examples:
In order to draw up the statement of changes in equity for George's Catering, we will take all items that affect the owners equity (the owner's share of the business) and put these in this new statement. Drawings and capital will thus definitely be included here. What about
income
and
expenses?
Well, the income and expenses have already been put in the
income statement
so as to calculate the profit or loss for the period. This overall profit or loss figure is now going to be transferred to the statement of changes in equity to calculate the closing balance of the owners equity. The statement of changes in equity for George’s Catering is shown below:
As you can see, the closing balance of the owner’s equity is the same as what we calculated in earlier sections:
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Income Statement Example
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Balance Sheet Example
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