DIFFERENT FORMS OF

BUSINESS ORGANIZATION AND

THE PREPARATION OF
STATEMENT OF CHANGES IN
EQUITY
LEARNING OBJECTIVES:

At the end of the topic:

 Reflect on the differences among single/sole proprietorship, partnership and
corporation
 Reflect on the use of capital and drawing accounts
 Reflect on the importance of the SCE
FIVE MAJOR ACCOUNTS

ASSETS Inventories, prepaid expenses

LIABILITIES
Accounts payables, unearned income, long term debt

EQUITY xxx

REVENUES Service Income, Sales

INCOME Revenue less Expenses (amount found at

the bottom of the SCI)

EXPENSES Salaries expenses, depereciation expenses, etc

STATEMENT OF CHANGES IN EQUITY

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

company during the period.
 This statement is prepared prior to preparation of the Statement of Financial
Position
DIFFERENT FORMS OF BUSINESSES ORGANIZATION
 SINGLE/SOLE PROPRIETORSHIP
An entity whose assets, liabilities,income and
expenses are centered or owned by only one person.
 PARTNERSHIP
An entity whose assets, liabilities, income and
expenses are centered or owned by two or more
persons.
 CORPORATION
An entity whose assets, liabilities,income and
expenses are centered or owned by only itself being
a legally separate entity from its owners. Owners are
called shareholders of the company.
 LEARNING IS FUN COMPANY
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED DECEMBER 31, 2019
Owner Capital, January 1, 2019 100,000
Add:
Net Income for the year 2019 50,000
Additional Investment 25,000 75,000
Sub-total 175,000
Less: Withdrawals for the year 30,000
Owner Capital, December 31, 2019 145,000