STATEMENT OF

OWNER'S EQUITY
 A Statement of Owner's Equity shows the changes in the
capital account due to contributions, withdrawals, and
net income or net loss.
 Capital is increased by owner contributions and income,
and decreased by withdrawals and expenses.
 The Statement of Owner's Equity, which is prepared for
the sole proprietorship type of business, shows the
movement in capital as a result of those four elements.
STATEMENT OF OWNER'S EQUITY
EXAMPLE
 Assume that the company started the year 2019 with
$100,000 capital. During the year, the owner made
$10,000 additional contributions and $20,000 total
withdrawals. The Statement of Owner's Equity would
look like this:
EXPLANATION AND POINTERS
 A Statement of Owner's Equity (SOE) shows the owner's capital at the
start of the period, the changes that affect capital, and the resulting capital
at the end of the period. It is also known as "Statement of Changes in
Owner's Equity".
 A typical SOE starts with a heading which consists of three lines. The first
line shows the name of the company; second the title of the report; and
third the period covered.
 The title of the report is Statement of Owner's Equity. This is used for sole
proprietorships. For partnerships, the title used is "Statement of Partners'
Equity" and for corporations, "Statement of Stockholders' Equity".
 Notice that the third line is worded "For the Year Ended..." This means
that the SOE presents information for a specific span of time. In the above
example, the period covers 1 year that ends on December 31, 2019.
Hence, the amounts presented pertain to changes to owner's equity from
January 1, 2019 to December 31, 2019.
 The capital account used in the illustration is Strauss,
Capital. The capital account used would vary from company
to company.
 Income increases capital. Expenses decrease it. Net income
is equal to income minus expenses. Hence, net income would
increase the capital account. If expenses exceed income,
there is a net loss. In such case, net loss will decrease the
capital account.
 Notice that the net income above, $ 57,100, is the bottom-
line amount in the company's Income Statement.
 Strauss, Drawings represents the total withdrawals made by
the owner during the period. The owner made $ 20,000 total
drawings. This amount is deducted to get the capital balance.
 The Statement of Owner's Equity example above shows
that the company has $147,100 in capital as a result of
the following: $100,000 balance at the beginning of the
year, plus $10,000 owner's contributions during the year,
plus $57,100 net income, and minus $20,000
withdrawals.
 Good accounting form suggests that a single line is
drawn every time an amount is computed (it signifies
that a mathematical operation has been completed). The
bottom-line amount is double-ruled, i.e. $ 147,100.