How To Do

Statement of
Changes in Equity?
By: Mary Grace M. Mercado
What Is the Statement of Changes in
Equity (SoCE)?
The SoCE is prepared to meet the requirements of the readers
to understand the transactions that cause the movements in
equity accounts.

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

Owner’s Capital Account

 Preparation of SoCE
1. Sole proprietorship

SoCE ‒ Sole Proprietorship

 Preparation of SoCE
1. Sole proprietorship
 Preparation of SoCE
2. Partnership

Each partner’s Capital account will track his/her:

• contributions to the business;
• share in the net income; and
• drawings.
 Preparation of SoCE
2. Partnership
 Preparation of SoCE
3. Corporation

Paid in Capital

Retained Earnings
 Preparation of SoCE
3. Corporation

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