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Fundamentals of Accountancy, Business and Management 2 – Grade 12
Alternative Delivery Mode
Quarter 1 – Module 4: Statement of Changes in Equity
First Edition, 2020

Republic Act 8293, section 176 states that: No copyright shall subsist in any work
of the Government of the Philippines. However, prior approval of the government agency or
office wherein the work is created shall be necessary for exploitation of such work for profit.
Such agency or office may, among other things, impose as a condition the payment of
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Borrowed materials (i.e., songs, stories, poems, pictures, photos, brand names,
trademarks, etc.) included in this module are owned by their respective copyright holders.
Every effort has been exerted to locate and seek permission to use these materials from
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ownership over them.

Published by the Department of Education, Division of Palawan

Schools Division Superintendent:
Natividad P. Bayubay, CESO VI
Assistant Schools Division Superintendents:
Loida P. Olavario, Ph.D.
Felix M. Pamaran

Development Team of the Module

Writers: Bella A. Velasco
Content Editors: Edheson M. Gapad
Mark G. Javillonar
Language Editor: Marianne R. Valdez
Reviewers: Eric N. Quillip
Layout Artist: Mark G. Javillonar
Management Team: Aurelia B. Marquez
Rodgie S. Demalinao
Eric N. Quillip

Printed in the Philippines by ________________________

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Telephone: (048) 433-6392
E-mail Address: palawan@deped.gov.ph
Website: www.depedpalawan.com

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Introductory Message
For the facilitator:

Welcome to the Fundamentals of Accountancy, Business & Management 2 –

Grade 12 Modular Distance Learning Module (MDL) Self-Learning Module on
Statement of Changes in Equity!
This module was collaboratively designed, developed and reviewed by educators
from public institution to assist you, the teacher or facilitator in helping the
learners meet the standards set by the K to 12 Curriculum Most Essential Learning
Competencies (MELCs) in the “New Normal” situation while overcoming their
personal, social, and economic constraints in schooling.

This learning resource hopes to engage the learners into guided and independent
learning activities at their own pace and time. Furthermore, this also aims to help
learners acquire the needed 21st century skills while taking into consideration
their needs and circumstances.

In addition to the material in the main text, you will also see this box in the body of
the module:

Notes to the Teacher

This contains helpful tips or strategies
that will help you in guiding the learners.

As a facilitator, you are expected to orient the learners on how to use this module.
You also need to keep track of the learners' progress while allowing them to
manage their own learning. Furthermore, you are expected to encourage and assist
the learners as they do the tasks included in the module.

iv
For the learner:

Welcome to the Fundamentals of Accountancy, Business & Management 2 –

Grade 12 Modular Distance Learning (MDL) Self Learning Module on
Statement of Changes in Equity!
This module was designed to provide you with fun and meaningful opportunities
for guided and independent learning at your own pace and time. You will be
enabled to process the contents of the learning resource while being an active
learner.

This module has the following parts and corresponding icons:

What I Need to Know This will give you an idea of the skills or
competencies you are expected to learn in
the module.

What I Know This part includes an activity that aims to

check what you already know about the
lesson to take. If you get all the answers
correct (100%), you may decide to skip this
module.

What’s In This is a brief drill or review to help you link

the current lesson with the previous one.

What’s New In this portion, the new lesson will be

introduced to you in various ways; a story, a
song, a poem, a problem opener, an activity
or a situation.

What is It This section provides a brief discussion of

the lesson. This aims to help you discover
and understand new concepts and skills.

What’s More This comprises activities for independent

practice to solidify your understanding and
skills of the topic. You may check the
answers to the exercises using the Answer
Key at the end of the module.

What I Have Learned This includes questions or blank

sentence/paragraph to be filled into process
what you learned from the lesson.

What I Can Do This section provides an activity which will

help you transfer your new knowledge or
skill into real life situations or concerns.

Assessment This is a task which aims to evaluate your

level of mastery in achieving the learning
competency.

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 Additional Activities In this portion, another activity will be given
to you to enrich your knowledge or skill of
the lesson learned.

Answer Key This contains answers to all activities in the

module.

At the end of this module you will also find:

References This is a list of all sources used in

developing this module.

The following are some reminders in using this module:

1. Use the module with care. Do not put unnecessary mark/s on any part of
the module. Use a separate sheet of paper in answering the exercises.
2. Don’t forget to answer What I Know before moving on to the other activities
included in the module.
3. Read the instruction carefully before doing each task.
4. Observe honesty and integrity in doing the tasks and checking your
answers.
5. Finish the task at hand before proceeding to the next.
6. Return this module to your teacher/facilitator once you are through with it.
If you encounter any difficulty in answering the tasks in this module, do not
hesitate to consult your teacher or facilitator. Always bear in mind that you are
not alone.

We hope that through this material, you will experience meaningful learning
and gain deep understanding of the relevant competencies. You can do it!

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 What I Need to Know

This module was designed and written with you in mind. It is here to help you
master the nature of Statement of Changes in Equity. The scope of this module
permits it to be used in many different learning situations. The language used
recognizes the diverse vocabulary level of students. The lessons are arranged to
follow the standard sequence of the course. But the order in which you read them
can be changed to correspond with the textbook you are now using.

The module composed of one lesson:

• Lesson 1 – Preparing a Statement of Changes in Equity (SCE) for a single
proprietorship

After going through this module, you are expected to:

1. Define Statement of Changes in Equity;
2. Identify the components of SCE;
3. Recognize the steps in preparing SCE
4. Prepare a Statement of Changes in Equity for a single proprietorship; and
5. Show appreciation on the importance of SCE in an organization.

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 What I Know
Directions: Choose the letter of the best answer and write on a separate sheet of
paper.

1. It shows the changes in the capital account due to contribution, withdrawals,

and net income or net loss.
a. Statement of Financial Position (SFP)
b. Statement of Comprehensive Income (SCI)
c. Statement of Cash Flows (SCF)
d. Statement of Changes in Equity/Owner’s Equity (SCE)

2. What is the first step to prepare the Statement of Changes in Equity/Owner’s

Equity?
a. Report Capital at the beginning of the period
b. Prepare the heading
c. Gather the needed information
d. Add additional investment

3. Which information is needed in the preparation of the heading of the Statement

of Changes in Equity/Owner’s Equity (SCE)?
a. Name of the company c. Name of the owner
b. Name of the products d. None of the above

4. The following are parts of the heading of the Statement of Changes in

Equity/Owner’s Equity EXCEPT_______________.
a. Name of the owner c. Name of the statement
b. Name of the company d. Date of preparation

5. Which item in the Statement of Changes in Equity decreases owner’s equity?

a. Initial investment c. Net Income
b. Additional investment d. Net Loss

6. An item in the Statement of Changes in Equity which increases in owner’s

equity without additional investment.
a. Initial investment c. Net Income
b. Additional investment d. Net Loss

7. This type of statement shows all changes, whether increases or decreases to the
owner’s interest on the company during the period.
a. Statement of Financial position (SFP)
b. Statement of Comprehensive Income (SCI)
c. Statement of Changes in Equity/Owner’s Equity (SCE)
d. Statement of Cash Flows (SCF)

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8. What do you call the very first investment of the owner to the company?
a. Initial investment c. Initial deposit
b. Additional investment d. Additional deposit

9. If the company’s beginning owner’s equity amounted to Php500,000, net loss for
the year totaled Php50,000, and there is no additional investments and
withdrawals, How much is the total increase in equity for the year.
a. P20,000 decrease in equity c. Zero (0) increase in equity
b. P50,000 increase in equity d. None of these

10. 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 withdrawal is P65,000. How much
is Juana’s capital balance at the end of 2017?
a. Php185,000 c. Php250,000
b. Php200,000 d. Php265,000

11. Compute for the total increase in equity for the year using the following data:
Beginning Owner’s equity amounted to P200,000. Net Income for the year
totaled P55,000. Additional Investment during the year amounted to 30,000. No
withdrawals for the period.
a. Php85,000 c. Php255,000
b. Php230,000 d. Php285,000

12. Owner, Pedro Matatag invested an initial capital amounting P40,000 in order to
put up his car wash business. During the first year of operations (2018), the
business had a loss of Php20,000. Because of that, Pedro invested additional
capital amounting to Php35,000 in 2019. In the second year (2019), the
company had a net income of Php80,000 and Pedro withdrew Php15,000 for
personal use. Compute for the ending capital balance of Pedro for the year
2019.
a. Php70,000 c. Php105,000
b. Php100,000 d. Php120,000

13. Owner Pacita Magalang invested Php150,000 to start her landscaping business.
During the first year of operations (2018), the company had a net income of
Php25,000. Pacita invested additional Php100,000 to grow the business. In
2019, the business earned P45,000. As of December 31, 2019, Pacita’s capital
balance is P300,000. How much is Pacita’s withdrawal?
a. Php20,000 c. Php45,000
b. Php25,000 d. Php75,000

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14. The following balances were taken from the records of Jack’s Computer Services
for the year ended December 31, 2018. Capital Beg, Jan.2017 amounting to Php
200,000, withdrawals Php 30,000, additional investment P20,000, and net loss
during the period Php25,000. Compute for the Capital/equity at the end of the
year.
a. Php135,000 c. Php165,000
b. Php145,000 d. Php185,000
c.
15. Alona Mabalot Business agency has a Capital or equity Beg., Jan 1, 2016
amounting to P850,000, During the period the business earned profit
amounting to P225,000. The owner made withdrawals of P50,000 during the
year and made an additional capital investment of P125,000. How much is the
ending capital or equity at the end of the year of Alona’s Business Agency?
a. Php850,000 c. Php1,125,000
b. Php1,100,000 d. Php1,150,000

4
Lesson Preparing an Statement of
1 Changes in Equity (SCE) for a
single proprietorship
Preparing Statement of Changes in Equity is a very important aspect of managing
business whether single/sole proprietorship, partnership, and corporation.
“Statement of Changes in Equity”, or Statement of Owner’s Equity for single
proprietorship, Statement of Changes in Partners’ Equity for Partnership business,
and Statement of Shareholders’ Equity for Corporation, is prepared after you have
done preparing your statement of comprehensive income (SCI). The statement of
Changes in Equity is now a required statement, which is needed to be prepared by
every form of business organizations.

What’s In

In the previous lesson, you have already learned to identify the elements of the
Statement of Comprehensive Income (SCI) and you are able to describe each item
for a service business and merchandising business, and you also learned to
prepare the Statement of Comprehensive Income for a service business using a
single-step approach, and for a merchandising business using the multi-step
approach.

Notes to the Teacher

The teacher/facilitator should begin the lesson by letting the learner

do activity No. 1. Let them answer the given worksheet which will
help them familiarize with the key terms.

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 What’s New

Now, in this module, we will focus our discussion in the preparation of Statement
of Changes in Equity for Sole/Single Proprietorship Business/entity. The activity
below will help you check how much you know about your assets, liabilities,
income, and equity or capital, and will help you determine your own equity or net
worth.

Activity No. 1: Compute Your Personal Equity

Directions: Think and Write about all the assets that you have (anything that you
own) and how much they cost. Then think about whom you owe money (Liabilities-
friends, family members, parents, etc.) to and how much you owe. Complete the
table below. Make sure to total the second column (cost) and the fourth column
(amount owed), then deduct the total liabilities from your assets. The net amount
you computed is designated as your Equity.

ASSETS LIABILTIES Net Amount

(Items that you Cost (Who you owe Amount Owed (designated as
own) Money) your Equity)

TOTAL PHP PHP PHP

REMEMBER:

A business can still earn, have a lot of assets but also have a very small equity
because of a lot of liabilities. This means that the owner of the business only
has a very small claim over the company’s assets and income.

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 What is It

In activity 1, you are able to identify your personal assets, liabilities and able to
compute the net amount which represent your own equity. Now, in this part of the
module you will learn how to prepare the Statement of Changes in Equity.

What is Equity and Statement of Changes in Equity?

EQUITY - Equity /capital-is the residual interest of the owners in the assets of the
business after considering all liabilities. It is equal to total assets minus total
liabilities.
This account is used to record the original and additional investments of the owner
of the business entity. It is increased by the amount of profit earned during the
year or is decreased by a loss. Cash or other assets that the owner may withdraw
from the business ultimately reduce. This account title bears the name of the
owner.

STATEMENT OF CHANGES IN EQUITY

The statement of Changes in Equity or Statements of Owner’s Equity shows the

changes in the capital account due to contribution, withdrawals, and net income or
net loss.

Capital is increased by owner contribution and income and decreased by

withdrawals and expenses.

All changes, whether increase or decrease to the owner’s interest on the company
during the period. 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).

The statement of changes in equity summarizes the changes that occurred in

owner’s equity. This statement is now required statement. Changes in an
enterprise’s equity between two balance sheet dates reflect the increase or decrease
in its net assets during the accounting period.

In the case of sole proprietorships, increases in owner’s equity arise from additional
investments by the owner and profit during the period. Decreases result from
withdrawals by the owner and from loss for the period. The beginning balance and
additional investments are taken from the owner’s capital account in the general
ledger. The profit or loss figure comes directly from the income statement while the
withdrawals from the balance columns in the worksheet.

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Different parts of the Statement of Changes in Equity

1. Heading
i. Name of the Company
ii. Name of the Statement
iii. Date of preparation (emphasis on the wording – “for the”)
2. Increases to Equity
i. Net income for the year
ii. Additional investment
3. Decreases to Equity
i. Net loss for the year
ii. Withdrawals by the owner

Statement of Changes in Owner’s Equity for a Single/Sole Proprietorships

The “Statement of Owner’s Equity or Statement of Changes in Owner’s Equity”

summarizes the items affecting the capital account of a sole/single proprietorship
business.

A sole proprietorship’s capital is affected by four items: owner’s contributions,

owner’s withdrawals, income and expenses.

The following are the steps in preparing a statement of Changes in Owner’s Equity
by using the unadjusted trial balance:

STEP 1: Gather the needed information.

The statement of Changes in Owner’s Equity is prepared second to the Income

Statement. Take note, that the most appropriate source of information in preparing
financial statements would be the adjusted trial balance; however, any report with
a complete list of updated accounts may be used.

Mabait Repair Services

Adjusted Trial Balance
December 31, 2018

Account Title Debit Credit

Cash P 10,560
Accounts Receivable 25,480
Service Supplies 2,350
Furniture and Fixtures 85,000
Service Equipment 550,000
Accumulated Depreciation P 93,000
Accounts Payable 43,520
Utilities Payable 12,480
Loans Payable 375,000
Mr. Mabait Capital 135,000
Mr. Mabait Drawing 5,000
Service Revenue 297,740
Rent Expense 14,500
Salaries Expense 195,000
Taxes and Licenses 12,300

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 Utilities Expense 8,750
Service Supplies Expenses 1,300
Depreciation Expense 46,500
Totals P 956,740 P 956,740

STEP 2: Prepare the heading.

Like any financial statement, the heading is made up of three lines. The first line is
the name of the company. The second line shows the title of the report. In this
case, the title is Statement of Changes in Owner’s Equity, Statement of Owner’s
Equity, or simply Statement of Changes in Equity. Any of the three titles would be
all right. The third line shows the period covered. The report covers a span of time;
hence we use “For the Year Ended” For the Quarter Ended, For the Month Ended,
etc. Some annual financial statements omit the “For the Year Ended” phrase.

Example:

Mabait Repair Services

Statement of Changes in Equity
For the Year Ended, December 31, 2019

STEP 3. Report Capital at the beginning of the period.

Report the capital balance at the beginning of the period reported – or the amount
at the end of the previous period.

Remember that the ending balance of the last period is the beginning balance of
the current period.

Mabait Repair Services

Statement of Changes in Equity
For the Year Ended, December 31, 2019

Mr. Mabait Capital, January 1, 2019 P135,000

STEP 4. Add additional contributions.

Contributions from the owner increases capital, therefore, it must be added to the
capital balance.

Mabait Repair Services

Statement of Changes in Equity
For the Year Ended, December 31, 2019

Mr. Mabait Capital Beginning P135,000

Add: Additional Investment P30,000

STEP 5. Add net income.

Net Income increases capital, therefore it is added to the beginning capital balance.
Net income is equal to all revenues minus all expenses

9
 Mabait Repair Services
Statement of Changes in Equity
For the Year Ended, December 31, 2019

Mr. Mabait Capital Beginning P135,000

Add: Additional Investment P30,000
Net Income 19,390 49,390
Total P184,390

STEP 6. Deduct owner’s withdrawals.

Withdrawal made by the owner is recorded separately from contributions. It can

easily found in the adjusted trial balance as “Owner, Drawings”, “Owner
withdrawals”, or any other appropriate account. Withdrawals decreases capital,
therefore it must be deducted to the capital balance.

Mabait Repair Services

Statement of Changes in Equity
For the Year Ended, December 31, 2019

Mr. Mabait Capital Beginning P135,000

Add: Additional Investment P30,000
Net Income 19,390 49,390
Total P184,390
Less: Withdrawal 5,000

STEP 7. Compute for the ending capital balance.

Compute for the balance of the capital account at the end of the period and draw
the lines.

Take note, one horizontal line means that a mathematical operation has been
performed. Two horizontal lines (double-rule) are drawn below the final amount.

Below is an example of Statement of Changes in Equity:

Mabait Repair Services

Heading Statement of Changes in Equity
For the Year Ended, December 31, 2019

Mr. Mabait Capital Beginning P135,000

Increases Add: Additional Investment P30,000
Equity
Net Income 19,390 49,390
Total P184,390
Decreases
Less: Withdrawal 5,000
Equity
Mr. Mabait Capital, December 31, 2019 P 179,390

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For you to understand more the Statement of Changes in Equity, you must also
know the difference of initial investment and the additional investments and define
withdrawals.

Initial Investment refers to the very first investment of the owner to the company.

Additional Investment increases the owner’s equity by adding investments by the

owner (Haddock, Price, & Farina, 2012).

Withdrawals –Decreases the owner’s equity by withdrawing assets by the owner

(Haddock, Price, & Farina, 2012).

*Distribution of Income – When a company is organized as a corporation, owners

(called shareholders) does not decrease equity by way of withdrawal. Instead, the
corporation distributes the income to the shareholders based on the shares that
they have (percentage of ownership of the company).

Tips: The use of the word “for the” in the SCE are

changes during the period. This means that what happened in

the previous years are not included in the Statement.

11
 What’s More

Understanding the Terms and Importance of SCE

There are ways you can understand the importance of SCE better. One way is by
defining the word in context. Another way is by looking at the parts of the sample
SCE. Each word part can give you a clue as to the meaning of the SCE importance
in Business, and to prepare its statement given the information during the period.
Activity 2: Matching Type
Directions: Match Column A with Column B. Write your answer on your answer
sheet.
COLUMN A COLUMN B
1. It is equal total assets minus total liabilities A. Additional Investment
2. It shows the changes in the capital account B. Name of the Company
due to contribution, withdrawals and net
income or net loss.
3. The first line in the Statement of Changes in C. Initial Investment
Equity
4. The very first investment of the owner to the D. Gather the needed
company. information
5. Increases to owner’s equity by adding E. Adjusted Trial Balance
investments by the owner.
6. Increases to owner’s equity without additional F. Net loss for the year
investment.
7. Decreases to owner’s equity apart from net G. Net Income
effect of revenues and expenses.
8. Decreases to equity H. Net Income for the year
9. Increases to equity I. Gross Income
10. Decrease in equity aside from withdrawals of J. Heading
the owners.
11. This statement is prepared prior to preparation K. Withdrawals by the owner
of the Financial Statement.
12. The period Covered/date of preparation L. Income
13. The first step in the preparation of Statement M. Equity
of Changes in Equity
14. The most appropriate source of information in N. Distribution of Income
preparing financial statements
15. It is equal to all revenues minus all expenses O. Statement of Changes in
Equity

12
 What I Have Learned

At this point, let us see how much you have learned from the discussions and
activities you have undergone.

Activity 3: Fill in the Blanks

A. The steps in preparing the Statement of Changes in Equity the
following:(1)______________________,(2),______________________________,

( 3)_______________________________,(4)_______________________________,

(5) ________________________________,(6) _____________________________,

(7) _____________________________________.

B. The (8) ___________________________ summarizes the changes, that occurred

in owner’s equity.

C. In the case of sole proprietorship, increases in owner’s equity arise from (9)
______________________________ and (10)________________ during the period.

D. The net amount computed after deducting all your liabilities from your
assets are designated as your (11) ____________________.

E. The very first investment of the owner to the company is called

(12)_________________________.

F. Increases in owner’s equity without additional investment

(13)_______________________.

G. Decreases to owner’s equity apart from net effect of revenues and

expenses.(14) ____________________ or (15)___________________________.

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 What I Can Do
This activity will help you reflect into real-life situation the knowledge and skills
you have learned from this module.

Activity 4: COMPUTE and PREPARE

Directions: For 3-point each, compute the following problems. Write your answer
and solution on the answer sheet.

1. Beginning Owner’s equity amounted to Php500,000. Net loss for the year totaled
Php50,000. No additional investments and withdrawals for the period. Compute
for total increase in equity for the year.
Ans. _______________________________
2. Ending owner’s equity amounted to Php80,000. Additional investments during
the year amounted to Php50,000. Withdrawals totaled P60,000. Compute for
the company’s income for the year assuming beginning equity is Php20,000.
Answer: ____________________________
3. Beginning Owner’s equity amounted to P200,000. Net Income for the year
totaled P55,000. Additional Investment during the year amounted to 30,000. No
withdrawals for the period. Compute for total increase in equity for the year.
Ans. _______________________________
4. Owner, Pedro invested an initial capital amounting P50,000 in order to put up
his car wash business. During the first year of operations (2018), the business
had a loss of Php25,000. Because of this, Pedro invested additional capital
amounting to Php50,000 in 2019. In the second year (2019), the company had a
net income of Php100,000 and Pedro withdrew Php10,000 for personal use.
Compute for the ending capital balance of Pedro for the year 2019.
Ans. _________________________________________
5. The following balances were taken from the records of Jose Malabag’s Laundry
Services for the year ended December 31, 2019. Prepare the statement of
Changes in Equity of Jose Malabag’s Laundry Services.
Capital, January 1, 2018 Php300,000
Withdrawals 50,000
Additional Investment 50,000
Net Loss 35,000

14
 Assessment
Directions: Choose the letter of the best answer and write on a separate sheet of
paper.

1. Alona Mabalot Business agency has a capital or equity beg., Jan 1, 2016
amounting to P850,000. During the period the business earned profit
amounting to P225,000. The owner made withdrawals of P50,000 during the
year and made an additional capital investment of P125,000. How much is the
ending capital or equity at the end of the year of Alona’s Business Agency?
a. Php850,000 c. Php1,125,000
b. Php1,100,000 d. Php1,150,000

2. What is the first step to prepare the Statement of Changes in Equity/Owner’s

Equity?
a. Report Capital at the beginning of the period
b. Prepare the heading
c. Gather the needed information
d. Add additional investment

3. It shows the changes in the capital account due to contribution, withdrawals,

and net income or net loss.
a. Statement of Financial Position (SFP)
b. Statement of Comprehensive Income (SCI)
c. Statement of Cash Flows (SCF)
d. Statement of Changes in Equity/Owner’s Equity (SCE)

4. Compute for the total increase in equity for the year using the following data:
Beginning Owner’s equity amounted to P200,000. Net Income for the year
totaled P55,000. Additional Investment during the year amounted to 30,000. No
withdrawals for the period.
a. Php85,000 c. Php255,000
b. Php230,000 d. Php285,000

5. Which information is needed in the preparation of the heading of the Statement

of Changes in Equity/Owner’s Equity (SCE)?
a. Name of the company c. Name of the owner
b. Name of the products d. None of the above

6. What do you call the very first investment of the owner to the company?
a. Initial investment c. Initial deposit
b. Additional investment d. Additional deposit

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7. 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 withdrawal is P65,000. How much
is Juana’s capital balance at the end of 2017?
a. Php185,000 c. Php250,000
b. Php200,000 d. Php265,000

8. Owner, Pedro Matatag invested an initial capital amounting P40,000 in order to

put up his car wash business. During the first year of operations (2018), the
business had a loss of Php20,000. Because of that, Pedro invested additional
capital amounting to Php35,000 in 2019. In the second year (2019), the
company had a net income of Php80,000 and Pedro withdrew Php15,000 for
personal use. Compute for the ending capital balance of Pedro for the year
2019.
a. Php70,000 c. Php105,000
b. Php100,000 d. Php120,000

9. Which item in the Statement of Changes in Equity decreases owner’s equity?

a. Initial investment c. Net Income
b. Additional investment d. Net Loss

10. This type of statement shows all changes, whether increases or decreases to the
owner’s interest on the company during the period.
a. Statement of Financial position (SFP)
b. Statement of Comprehensive Income (SCI)
c. Statement of Changes in Equity/Owner’s Equity (SCE)
d. Statement of Cash Flows (SCF)

11. The following are parts of the heading of the Statement of Changes in
Equity/Owner’s Equity EXCEPT_______________.
a. Name of the owner c. Name of the statement
b. Name of the company d. Date of preparation

12. If the company’s beginning owner’s equity amounted to Php500,000, net loss for
the year totaled Php50,000, and there is no additional investments and
withdrawals, How much is the total increase in equity for the year.
a. P20,000 decrease in equity c. Zero (0) increase in equity
b. P50,000 increase in equity d. None of these

13. Owner Pacita Magalang invested Php150,000 to start her landscaping business.
During the first year of operations (2018), the company had a net income of
Php25,000. Pacita invested additional Php100,000 to grow the business. In
2019, the business earned P45,000. As of December 31, 2019, Pacita’s capital
balance is P300,000. How much is Pacita’s withdrawal?
a. Php20,000 c. Php45,000
b. Php25,000 d. Php75,000

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14. The following balances were taken from the records of Jack’s Computer Services
for the year ended December 31, 2018. Capital Beg, Jan.2017 amounting to Php
200,000, withdrawals Php 30,000, additional investment P20,000, and net loss
during the period Php25,000. Compute for the Capital/equity at the end of the
year.
a. Php135,000 c. Php165,000
b. Php145,000 d. Php185,000

15. An item in the Statement of Changes in Equity which increases in owner’s

equity without additional investment.
a. Initial investment c. Net Income
b. Additional investment d. Net Loss

17
 Additional Activities
Let us reinforce the skills and knowledge that you have learned from this lesson by
doing the next activity. This activity will be a help in developing your skills,
knowledge and make you more aware of the business industry by getting firsthand
information from a local business owner in your locality.

Activity 5: Advancing Capability and Potential of Knowing Business and

Accounting Practice.

What to do?
1. Identify at least one business in your community/locality (single/sole
proprietorship business).

2. Ask the following questions to the owner:

a. Since when did you start your business?
b. Do you have an accounting practice in your business?
c. Do you maintain a book of accounts in your business?
d. Is your reporting period, monthly, quarterly, semi-annual, or annually?

3. Ask the owner (if you may be allowed), their initial (beginning) capital,
additional investment (if any), income, and withdrawals (if any).

4. Make a summary and discussion report of your interview and prepare the
Statement of Changes in Equity given the data that you need.

Rubrics in Rating Activity 7

5 4 3 2 1
Category Scoring Data VGE GE SE LE N
Organization Ideas were logically arrange
Appropriate organization as pattern
was observed
Content Content was relevant
Purpose was well defined
Preparation/ Presentation of report was proper
presentation and organized
of report

Legend: VGE – To a very great extent LE – To a little extent

GE – To a great extent N – Not at all
SE – To some Extent

18
 19
Activity 1: Compute Activity 2:
What I Know Your Personal Equity Matching Type
1. C 1. M
2. C Sample answer
2. O
3. A
4. A 3. B
5. D 4. C
6. C 5. A
7. C 6. H
8. A 7. F
9. C 8. F/K
10. B 9. A/H
11. D 10. F
12. D 11. O
13. A 12. J
14. C 13. D
15. D
14. E
15. G
Activity 3:
Activity 4: Compute and Prepare
1. Gather the needed
1. No increase/increase is zero but decrease is
information
P50,000
2. Prepare the heading
2. P70,000
3. Report capital at the
3. P285,000
beginning of the period
4. P165,000
4. Add additional
5.
contribution/investment
Malabag’s Laundry Services
5. Add net income
Statement of Changes in Equity
6. Deduct owner’s withdrawal
For the Period Ended, December 31, 2019
7. compute for the ending
capital balance Malabag Capital, Jan. 1, 2019 P300,000
8. Statement of Changes in Add: Additional Investment 50,000
Equity Sub-total 350,000
9. Additional Less: Net loss P35,000
investment/contribution by Withdrawals 50,000 85,000
the owner Malabag Capital, Dec. 31,2019 P265,000
10. Profit during the period
11. Equity
Assessment
12. Initial investment
1. D 9. D
13. Net income
2. C 10. C
14. Withdrawals
3. C 11. A
15. Distribution of income
4. D 12. C
5. A 13. A
Activity 5: Additional Activity 6. A 14. C
Answers may vary 7. A 15. C
8. D
Answer Key
References
Ballada, S. & Ballada, W. Accounting Fundamentals Made Easy. Philippines
Fundamentals of Accountancy, Business & Management2 by Angeles A, De
Guzman, DBA, CPA
Haddock, M., Price, J., & Farina, M. (2012). College Accounting: A
Contemporary Approach, Second Edition. New York: McGraw-
Hill/Irwin.
Valencia, E. G., & Roxas, G. F. (2010). Basic Accounting (3rd ed.).
Mandaluyong City, Philippines: Valencia Educational Supply.

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