Key terms to remember (most of these were discussed in Chapters 20 of your previous

book):
Equity - residual interest  in the assets of the entity after deducting all of the liabilities
(net assets of the business)  

1. Increased by profitable operations and subsequent contributions of the owner.

2. Decreased by losses in operations and distributions to owners
Shareholder's equity - residual interest  in the net assets of the corporation
Share capital - portion of the paid in capital representing total par or stated value of the
shares issued
Subscribed share capital - portion of the authorized share capital that has been
subscribed but not yet fully paid, hence still unissued.
Subscriptions receivable - amount yet to be paid for the subscribed shares and are
preferably be reflected as a deduction from the related subscribed share capital.
Share premium - capital contributed by the shareholders in excess of par or stated
value of the shares subscribed and issued.
 
Retained earnings - is the aggregate or cumulative balance fo the following;

1. Net income of loss from operation

2. Dividend distributions
3. Prior period errors
4. Changes in accounting policies
5. Other capital adjustments
Retained earnings can be

1. Appropriated - which represents the restricted portion and therefore not available
for any dividend declation and distribution
2. Unappropriated - which represents the free portion and can be declared as
dividends to the shareholders.
3. In deficit - or in debit balance
Revaluation surplus - is the excess of sound value (also known as fair value or
depreciated replacement cost) over the carrying amount of the revalued asset (or net
book value after revaluation)
Treasury shares (discussed in Chapter 21) - entity's own shares that have been issued
and then re-acquired but not canceled.

1. Treasury shares are recorded using the cost method

2. Not recognized as assets and reported as a deduction from the shareholder's
equity
3. When treasury shares are acquired, there must be proper appropriation in the
retained earnings to the extend of the cost of the treasury shares.
Reserves - not officially in any accounting standard or framework.  However under IAS
or International Accounting Standards, reserves can be part of distributable
(unappropriated retained earnings) or non distributable equity (appropriated retained
earnings)
 
Customary forms in presenting a Statement of Financial Position:

1. Report form (vertical presentation) - downward sequence presentation of the

major sections:  Assets, Liabilities and Equity
2. Account form (Horizontal or T-account presentation) - assets on the left side and
liabilities and equity at the right
In the Philippines, the common practice is to present in the statement of financial
position current assets before non current assets, current liabilities before noncurrent
liabilities, and equity after the liabilities.  This reporting follows the presentation of
account in the order of liquidity format.