FUNDAMENTALS OF ACCOUNTACY,

BUSINESS AND MANAGEMENT 2

TOPIC: STATEMENT OF CHANGES IN OWNER’S EQUITY
STATEMENT OF FINANCIAL POSITION

SUBJECT TEACHER: JANZHEL LIMOS

At the end of the lesson, the student shall be able to:

• identify the elements of the SFP and SCE and describe

each of them
• prepare an SFP using the report form and the account
form
• prepare an SCE for a single proprietorship
 Financial Statements
A financial statement is a document that shows the financial activities of a
business. It’s your financial record of any and all transactions the business
has done during a set accounting period.
(https://www.freshbooks.com/)

Statement of Statement of
Statement of Statement of Financial
Changes in Owner’s Cash Flows
Comprehensive Income Position
Equity
(Income Statement) (Balance Sheet)
 J.C. MEN’S WEAR SHOP
Statement of Comprehensive Income
For the month ended December 31, 2020

Service Revenue P 3,745

Less: Wages Expense P 500
Utility Expense 400
Insurance Expense 47.50
Depreciation – sewing equipment 100
Sewing Supplies Expense 100
Bad Debts Expense 35
Clothing Materials Expense 800
Rent Expense 1,000
Interest Expense 8.38 2,990.88
Net Income P 754.12
Statement of Changes in Owner’s Equity

- It is a financial statement that shows the

movement in the equity or capital of the
company.

- All changes, whether increases or decreases to

the owner’s interest on the company during
the period are reported here.
PARTS OF THE STATEMENT OF
CHANGES IN EQUITY
Name of the Company
Name of the Statement
Date of Preparation

Beginning Capital xxx

Add: Additional Investments xxx
Net Income for the period xxx xxx
Subtotal xxx
Less: Withdrawals by the owner xxx
Net Loss for the period xxx xxx
Ending Capital xxx
 J.C MEN’S WEAR SHOP
WORKSHEET
For the month ended December 31,2020
 J.C MEN’S WEAR SHOP
Statement of Changes in Owner’s Equity
For the month ended December 31, 2020

Beginning Capital, December 1, 2020 P 8,000

Add: Net Income for the period 754.12
Subtotal 8,754.12
Less: Withdrawals by the owner 500
Ending Capital, December 31, 2020 P 8,254.12
Statement of Financial Position
Also known as the balance sheet. This statement includes the
amounts of the company’s total assets, liabilities, and owner’s
equity which in totality provides the condition of the company on
a specific date

PERMANENT ACCOUNTS – also known as real accounts,

these accounts are permanent in a sense that their balances
remain intact from one accounting period to another. This include
Cash, Accounts Receivable, Accounts Payable, Loans Payable
and Capital among others. Basically, assets, liabilities and equity
accounts are permanent accounts. They are called permanent
accounts because the accounts are retained permanently in the
SFP until their balances become zero.
Statement of Financial Position
CONTRA ASSET ACCOUNTS – Contra assets are
those accounts that are presented under the assets portion of
the SFP but are reductions to the company’s assets. These
include Allowance for Doubtful Accounts and Accumulated
Depreciation. Allowance for Doubtful Accounts is a contra asset
to Accounts Receivable. This represents the estimated amount
that the company may not be able to collect from delinquent
customers. Accumulated Depreciation is a contra asset to the
company’s Property, Plant and Equipment. This account
represents the total amount of depreciation booked against the
fixed assets of the company.
 FORMATS OF STATEMENT OF
FINANCIAL POSITION
REPORT FORM
A form of the SFP that shows asset
accounts first and then liabilities and
owner’s equity accounts after.
ASSETS
=
LIABILITIES
ACCOUNT FORM
A form of the SFP that shows assets
on the left side and liabilities and
owner’s equity on the right side just
like the debit and credit balances of
an account.
LIABILITIES

+ ASSET = +
OWNER’S EQUITY
OWNER’S EQUITY
 J.C MEN’S WEAR SHOP
WORKSHEET
For the month ended December 31,2020
REPORT FORM
J.C MEN’S WEAR SHOP
STATEMENT OF FINANCIAL POSITION
For the month ended December 31,2020

Assets

Current Assets
Cash P 1,575
Accounts Receivable – Flor Valdez P 300
Accounts Receivable – Julius Ilagan 400
Less: Allowance for Bad Debts 35 665
Sewing Supplies 170
Clothing Materials 700
Prepaid Rent 2,000
Prepaid Insurance 522.50
Total Current Assets P 5,632.50

Non-current Assets
Sewing Tools 590
Sewing Equipment P 6,000
Less: Accumulated Depreciation 100 5,900__
Total Non-Current Assets P 6,490
Total Assets P 12,122.50

Liabilities & Owner’s Equity

Accounts Payable – Virgilio Trading 860

Notes Payable 3,000
Accrued Interest Expense 8.38
Total Liabilities 3,868.38
Owner’s Equity _8,254.12
Total Liabilities & Owner’s Equity P 12,122.50
ACCOUNT FORM
J.C MEN’S WEAR SHOP
STATEMENT OF FINANCIAL POSITION
For the month ended December 31,2020

Assets Liabilities & Owner’s Equity

Current Assets Accounts Payable – Virgilio Trading 860

Cash P 1,575 Notes Payable 3,000
Accounts Receivable – Flor Valdez P 300 Accrued Interest Expense 8.38
Accounts Receivable – Julius Ilagan 400 Total Liabilities 3,868.38
Less: Allowance for Bad Debts 35 665 Owner’s Equity _8,254.12
Sewing Supplies 170 Total Liabilities & Owner’s Equity P 12,122.50
Clothing Materials 700
Prepaid Rent 2,000
Prepaid Insurance 522.50
Total Current Assets P 5,632.50

Non-current Assets
Sewing Tools 590
Sewing Equipment P 6,000
Less: Accumulated Depreciation 100 5,900__
Total Non-Current Assets P 6,490
Total Assets P 12,122.50
 REFERENCES:

Arganda, et al (2012) Accounting Principles 1, Fourth Edition, Mandaluyong City, Philippines,

National Book Store
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.