FUNDAMENTALS OF

SENIOR
ACCOUNTANCY, BUSINESS HIGH
AND MANAGEMENT 2 (FABM 2) SCHOOL
2
Self-
Statement of Changes in Equity Learning
Module
for Single Proprietorship 7

Quarter 1
Fundamentals of Accountancy, Business and Management 2 (FABM2) – Grade 12
Quarter 1 – Self-Learning Module 7: Statement of Changes in Equity for Single
Proprietorship
First Edition, 2020

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FABM2 SENIOR
HIGH
SCHOOL

Self-
Learning
Module 7

Quarter 1

Statement of Changes in Equity for

Single Proprietorship
Introductory Message

For the facilitator:

Welcome to the Fundamentals of Accountancy, Business and Management 2

for Grade 12 Self-Learning Module on Statement of Changes in Equity for Single
Proprietorship !

This Self-Learning Module was collaboratively designed, developed and

reviewed by educators from the Schools Division Office of Pasig City headed by its
Officer-in-Charge Schools Division Superintendent, Ma. Evalou Concepcion A.
Agustin, in partnership with the City Government of Pasig through its mayor,
Honorable Victor Ma. Regis N. Sotto. The writers utilized the standards set by the K
to 12 Curriculum using the Most Essential Learning Competencies (MELC) in
developing this instructional resource.

This learning material hopes to engage the learners in guided and

independent learning activities at their own pace and time. Further, this also aims
to help learners acquire the needed 21st century skills especially the 5 Cs, namely:
Communication, Collaboration, Creativity, Critical Thinking, and Character 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. Moreover, you are expected to encourage and assist
the learners as they do the tasks included in the module.
For the learner:

Welcome to the Fundamentals of Accountancy, Business and Management 2

Self-Learning Module on Statement of Changes in Equity for Single Proprietorship!

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 material while being an
active learner.

This module has the following parts and corresponding icons:

Expectations – These points to the set of knowledge and skills

that you will learn after completing the module.

Pretest - This measures your prior knowledge about the lesson

at hand.

Recap - This part of the module provides a review of concepts

and skills that you already know about a previous lesson.

Lesson - This section discusses the topic in the module.

Activities – These are sets of activities that you need to

perform.

Wrap Up - This section summarizes the concepts and

application of the lesson.

Valuing - This part integrates a desirable moral value in the

lesson.

Posttest - This measures how much you have learned from the
entire module.
 EXPECTATIONS
After going through this self-learning module, you are expected to:
1. identify the parts of the Statement of Changes in Equity for Single
Proprietorship;
2. prepare the Statement of Changes in Equity for Single Proprietorship;
and
3. reflect on the importance of preparing the Statement of Changes in
Equity for Single Proprietorship .

PRETEST

Multiple Choice. Directions: Read the statements carefully. Encircle the

letter of the best answer.
1. Which among the following is a major type of business organization?
a. Single Proprietorship c. Corporation
b. Partnership d. All of the above

2. It reported all changes, whether increases or decreases to the owner’s

interest on the company during the period.
a. Statement of Comprehensive Income
b. Statement of Financial Position
c. Statement of Changes in Equity
d. Statement of Cash Flow

3. The statement of comprehensive income and the statement of changes

in equity have the same format in preparing the date in its heading.
The date of both statement started with “for the”.
a. Both statements are correct
b. Both statements are wrong
c. First statement is wrong while the second statement is correct
d. First statement is correct while the second statement is wrong

4. The following are included in the statement of changes in equity

except for _____.
a. Additional investments c. Net income
b. Drawings d. Total assets
 5. All changes, whether increases or decreases to the owner’s interest on
the company during the period are reported in the Statement of
Changes in Equity. Statement of changes in equity was prepared after
the preparation of the Statement of Financial.
a. Both statements are correct
b. Both statements are wrong
c. First statement is wrong while the second statement is correct
d. First statement is correct while the second statement is wrong

a. RECAP

Directions: Determine the characteristics of the major types of

business organizations in the Philippines. Put a check mark.

Characteristics Single Partnership Corporation

Proprietorship
1. Involves two or
more persons in
agreement
2. Owned by a
proprietor
3. Relatively easy to
organize
4. Owned by
stockholders
5. The business and
the owner is one
entity
 LESSON

What is your opinion about the quotation? What is your viewpoint in

the changes that happened in your life? Are businesses exempted from
those changes? Relate this to the present lesson.

Statement of Changes in Equity for Single Proprietorship

All changes, whether increases or decreases to the owner’s interest on

the company during the period are reported in the Statement of Changes in
Equity. 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 Statement of Financial Position. (Haddock, Price, & Farina, 2012
as cited by Monfero et.al, 2016, 38).

According to the International Accounting Standards, (2016) the

statement of changes in equity must show the following:
 total comprehensive income for the period, showing separately
amounts attributable to owners of the parent and to non-controlling
interests;

 the effects of any retrospective application of accounting policies or

restatements made; and

 reconciliations between the carrying amounts at the beginning and

the end of the period for each component of equity, separately
disclosing: profit or loss, other comprehensive incomes and
transactions with owners, showing separately contributions and
distributions to owners and changes in ownership interests.
Furthermore, preparing a Statement of Changes in Equity for a single
proprietorship is quite direct. It also shows the movement in the capital
account of the owner. The Elements of an SCE for single proprietorship
include the beginning capital, additional investment, net income, and
withdrawals. (Beticon et.al. 2016, 55) A pro forma of an SCE for single
proprietorship is shown below.
 Name of the Company
Name of the Statement
For the Year Ended mm/dd/yyyy
Owner, Equity, Beginning Php XXX
Add:
Additional Investment XXX
Net Income XXX XXX
XXX
Less: Drawing (XXX)
Owner, Equity, Ending XXX

Figure 7.1 Pro forma of the Statement of Changes in Equity for Single
Proprietorship

Preparation of Statement of Changes in Equity for Single

Proprietorship
1. Prepare the statement heading

The statement heading includes the name of the company, the name
of the statement, and the date covered. The date of the Statement of
Comprehensive Income use “for the” because the amount in the SCI
are temporary, meaning that each period, amount go back to being
zero to start all over.

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

Figure 7.2. Heading

2. Determine the beginning balance of the capital (equity).

The equity beginning is the opening balance of the owner’s equity

account. This is the ending balance of the equity in the previous
accounting period.

ABC, Equity, Beginning Php 1,000,000.00

Figure 7.3. Beginning Balance of Capital

3. Determine the amount of investment (additional)

Additional investment increases the owner’s equity by adding

investments by the owner.

Add:
Additional Investment 250,000.00
Net Income 500,000.00 750,000.00
1,750,000

Figure 7.4. Additional Investment and Net Income

4. Determine the amount of the net income.

Determining the amount of the net income is being done by looking at

the statement of comprehensive income. This is the reason why the
statement of comprehensive income is prepared first before the SCE.

In case of net loss, the corresponding amount is deducted to arrive at

the ending capital. This is because net loss decreases the equity of
the owner to the business.

5. Determine the balance of the drawing account.

This can be done by referring to the ledger balance of the owner’s

drawing account. The bookkeeper or accountant use the owner’s
drawing account to record withdrawals of the owner. Entries to this
account decrease equity. It is closed at the end of the year to the
capital account.

Less: Drawing (300,000)

Figure 7.4. Drawing

6. Determine the ending balance of the capital or owner’s equity account.

After determining the beginning balance, investment, net income (or

net loss), and drawing, the ending balance of the equity account will
be determined. This is done by footing the partially completed SCE.
The completed SCE is shown below.
 ABC Company
Statement of Changes in Equity
For the Year Ended December 31, 2019
ABC, Equity, Beginning Php 1,000,000.00
Add:
Additional Investment 250,000.00
Net Income 500,000.00 750,000.00
1,750,000
Less: Drawing (300,000)
ABC, Equity, Ending Php 1,450,000.00

Figure 7.5. Statement of Changes in Equity for Single Proprietorship

ACTIVITIES

I. Practice.
Let’s do it! Directions: Solve the following problems. Show the
solutions.
1. Beginning owner’s equity amounted to P 600,000. Net loss for the year
totaled P 90,000. No additional investments and withdrawals for the period.
Compute for total increase or decrease in equity for the year.
2. Ending owner’s equity amounted to P140,000. Additional investments
during the year amounted to P60,000. Withdrawals totaled P100,000.
Compute for the company’s net income for the year assuming beginning
equity is P20,000.

II. Keep Practicing

I can solve it! Directions: Analyze the transactions and solve the
given problem. Show the solutions.
Owner, Maria invested an initial capital amounting P500,000 in order
to put up her computer repair shop. During the first year of operations
(2018), the company had a loss of P250,000. Because of this, Maria invested
additional capital amounting to P500,000 in 2018. In the second year
(2019), the company had a net income of P500,000 and Maria withdrew
P300,000 for personal use. Compute for the ending capital balance of Maria
for the year 2019.

III. I can do it! Directions: Prepare a statement of changes in equity

for Maria’s Laundry Shop. Follow the correct format.

The following balances were retrieved from the records of Maria’s

Laundry Shop for the year ended December 31, 2019:
Capital, January 1, 2019 P 600,000
Withdrawals 150,000
Additional Investments 100,000
Net Income 45,000

WRAP UP

Let’s wrap up!

 What are the elements of the statement of changes in equity for single
proprietorship?

 What are the steps in preparing the statement of changes in equity for
single proprietorship?

VALUING

 In running a business, why is it essential to prepare the statement of

changes in equity?
 POSTTEST

Multiple Choice. Directions: Read the statements carefully. Encircle the

letter of the best answer.
1. Which element of the statement of changes in equity decreases the
equity aside from the drawing?
a. net income c. drawing
b. net loss d. none the above

2. Which increases in owner’s equity without additional investment?

a. net income c. drawing
b. net loss d. none the above

3. In 2018, Maria’s Repair shop had a beginning capital of Php

300,000.00, additional investments amounted to Php100,000.00,
drawing of Php50,000.00. Unfortunately due to high cost of
operations, it had a net loss of 25,000. How much is Maria’s ending
capital in 2018?
a. Php 300,000.00 c. Php 315,000.00
b. Php 310,000.00 d. Php 325,000.00

4. In preparing the statement of changes in equity, which among the

following elements is not included?
a. beginning capital c. net loss
b. additional investments d. total assets

5. It shows the movement in the capital account of the owner.

a. Statement of Comprehensive Income
b. Statement of Changes in Equity
c. Statement of Financial Position
d. Cash Flow Statement
 KEY TO CORRECTION

5. b 5. Single prop. 5. d
4. d 4. corporation 4. d
3. d 3. Single prop. 3. a
2. a 2. Single prop. 2. c
1. b 1. partnership 1. d
Post test Recap Pretest

R E F E R E N CE S

Beticon, J. L., Domingo, JC. D., Yabut, FA. D. 2016. Fundamentals of

Accountancy, Business, and Management 2, Teacher’s Manual.
Quezon City: Vibal Group Inc.
Beticon, J. L., Domingo, JC. D., Yabut, FA. D. 2016. Fundamentals of
Accountancy, Business, and Management 2. Quezon City: Vibal
Group Inc.
Binuya, MVJ. M. 2016. Fundamentals of Accountancy, Business, and
Management Book 2. Manila: JFS Publishing Services.
Monfero, RP. P., Andres, C. S., Salazar, DR. C., Honorario, C. B. Teaching
Guide for Senior High School, Fundamentals of Accountancy, Business,
and Management Book 2. Quezon City: Commission on Higher
Education.
Salazar, D. R. 2017. Fundamentals of Accountancy, Business, and
Management 2. Manila: Rex Bookstore Inc.

Online References

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https://www.iasplus.com/en/standards/ias/ias1 retrieved 7/7/20 11:52
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