Republic of the Philippines
Department of Education
Region X
Division of Camiguin
CAMIGUIN NATIONAL HIGH SCHOOL
Looc, Catarman, Camiguin
MODULE 2
STATEMENT OF CHANGES IN
OWNER’S EQUITY
FUNDAMENTALS OF ACCOUNTANCY, BUSINESS AND
MANAGEMENT 2
Developed By:
MARIA CORINA A. DALEON
G12 – ABM Class Adviser
Page | 1
Republic of the Philippines
Department of Education
Region X
Division of Camiguin
CAMIGUIN NATIONAL HIGH SCHOOL
Looc, Catarman, Camiguin
K TO 12 BASIC EDUCATION CURRICULUM
SENIOR HIGH SCHOOL – ACCOUNTANCY, BUSINESS AND
MANAGEMENT (ABM) SPECIALIZED SUBJECT
GRADE 12
FIRST SEMESTER – FIRST QUARTER
Course Title:
Fundamentals of Accountancy, Business and
Management II
No. of Hours:
80 hours/semester
Prerequisite:
Fundamentals of Accountancy, Business and
Management II
Course Description: The course deals with the preparation and analysis
of financial statements of a service business and
merchandising business using horizontal and
vertical analysis and financial ratios. Knowledge
and skills in the analysis of financial statements
will aid the future entrepreneurs in making sound
economic decisions.
FUNDAMENTALS OF ABM 2
DATE DEVELOPED:
JUNE 2020
STATEMENT OF CHANGES IN OWNERS
EQUITY
DEVELOPED BY:
MARIA CORINA A. DALEON
Page 2 of
20
STATEMENT OF CHANGES IN OWNER’S EQUITY
Content Standard:
In this module, the learner is able to demonstrate an understanding of the
forms of business organization, namely single proprietorship, partnership, and
corporation, and the structure of a Statement of Changes in Equity of a single
proprietorship that will equip him/her in the preparation of the said financial report.
Performance Standard:
The learner shall be able to solve exercises and problems that require the
preparation of the Statement of Changes in Equity for a single proprietorship.
LESSON
LEARNING COMPETENCIES
1
Forms of Business
Organization and its
capital structure.
2
Preparation of Statement
of Changes in Equity for a
single proprietorship


CODE
The learner is able to
discuss the different
forms of business
organization and the
structure of a Statement
of Changes in Equity.
ABM_FABM12Ie-8
The learner is able to
prepare a Statement of
Changes in Equity for a
single proprietorship.
ABM_FABM12Ie-9
FUNDAMENTALS OF ABM 2
DATE DEVELOPED:
JUNE 2020
STATEMENT OF CHANGES IN OWNERS
EQUITY
DEVELOPED BY:
MARIA CORINA A. DALEON
Page 3 of
20
Module Pretest
MULTIPLE CHOICE. On a separate sheet of paper, choose the letter of your choice.
1.
Which of the following pertains to a business entity concept?
a. Transactions of the business (as a separate entity) must be distinguished
from the transactions of the owners.
b. Transactions of the business (as a separate entity) must be merged with
the transactions of the owners.
c. Revenues are recorded when it is earned.
d. Revenues are recorded when the corresponding cash has been received.
2.
Which of the following is a major type of business organization?
a. Sole Proprietorship
b. Partnership
c. Corporations
d. All of the above
3.
How many is considered owner(s) of a sole proprietorship?
a. One
b. More than one
c. Two but not more than five
d. Five and above
4.
How many is/are considered owner(s) in a partnership?
a. One
b. More than one
c. Two but not more than five
d. Five and above
5.
How are owners of a sole proprietorship called?
a. Sole proprietors
b. Partners
c. Shareholders/Stockholders
d. None of the above
6.
How are owners in a partnership called?
a. Sole proprietors
b. Partners
c. Shareholders/Stockholders
d. None of the above
7.
How are owners in a corporation called?
a. Sole proprietors
b. Partners
c. Shareholders/Stockholders
d. None of the above
8.
Which of the following sequences arranges the complexity of business
organizations, from simple to complex?
a. Partnership, Sole Proprietorship, Corporation
FUNDAMENTALS OF ABM 2
DATE DEVELOPED:
JUNE 2020
STATEMENT OF CHANGES IN OWNERS
EQUITY
DEVELOPED BY:
MARIA CORINA A. DALEON
Page 4 of
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b. Corporation, Sole Proprietorship, Partnership
c. Sole Proprietorship, Corporation, Partnership
d. Sole Proprietorship, Partnership, Corporation
9.
Which of the following sequences arranges the complexity of business
organizations, from difficult to the easiest?
a. Partnership, Sole Proprietorship, Corporation
b. Corporation, Sole Proprietorship, Partnership
c. Sole Proprietorship, Corporation, Partnership
d. Sole Proprietorship, Partnership, Corporation
10. Which of the following is the most appropriate business organization for an
entity named “Gomez, Burgos, Zamora, & Co., CPA’s?”
a. Sole Proprietorship
b. Partnership
c. Corporations
d. None of the above
11. Which of the following is most related to the saying “two heads are better than
one?”
a.
b.
c.
d.
Partnerships
Sole proprietorships
Corporations
None of the above
12. Which of the following are subjected to strict regulations?
a. Sole Proprietorship
b. Partnership
c. Corporations
d. All of the above
13. Which of the following is an advantage of a partnership as compared to a sole
proprietorship?
a. Unlimited liability
b. More sources of expertise
c. Concentration of management
d. Limited life
14. Which of the following is a disadvantage of a partnership as compared to a
sole proprietorship?
a. Unlimited liability
b. More sources of expertise
c. Concentration of management
d. Limited life
15. Generally, how long is the life of a corporation?
a. 50 years, subject to renewal
b. 50 years, not subject to renewal
c. As long as the life of the oldest shareholder
d. As long as the life of the youngest shareholder
FUNDAMENTALS OF ABM 2
DATE DEVELOPED:
JUNE 2020
STATEMENT OF CHANGES IN OWNERS
EQUITY
DEVELOPED BY:
MARIA CORINA A. DALEON
Page 5 of
20
FORMS OF BUSINESS ORGANIZATION
OBJECTIVES:
In this lesson, the learner is able to:

Discuss the different forms of business organization.
DISCUSSION:
Statement of Changes in Owner’s Equity
What is a Statement of Changes in Owner’s Equity?
Statement of Changes in Owner’s Equity is a financial statement that
summarizes the changes in owner’s equity for a given period of time. The beginning
equity/capital of the owner is increased by the additional investment and profit.
Correspondingly, it is decreased by withdrawal and loss.
Forms of Business Organization and their Capital Structures
Business Entity Concept
Business Entity Concept is a prevailing assumption in accounting. It states
that the transactions of the business (as a separate entity) must be distinguished
and differentiated from the transactions of the owners. Business transactions must
be captured in the financial statements of the reporting entity. Personal
transactions, on the other hand, must be kept in the records of the owners
(personal).
FUNDAMENTALS OF ABM 2
DATE DEVELOPED:
JUNE 2020
STATEMENT OF CHANGES IN OWNERS
EQUITY
DEVELOPED BY:
MARIA CORINA A. DALEON
Page 6 of
20
There are three major types of business organizations in the Philippines,
based on classification of ownership. This is a sort of review actually. We have been
discussing this already in our FABM 1 topics. These business organizations are sole
proprietorships, partnerships, corporations, and cooperative.
Sole Proprietorship
The business is owned by one person called “proprietor”. As there is only one
owner in a Sole or Single Proprietorship business, the capital account is called
Owner’s Equity.
The capital structure of a Sole or Single Proprietorship business follows:
Owner’s Equity, beginning
Add: Additional Investment
Profit
Total
Less: Withdrawal
Owner’s Equity, end
₱
₱
xxx
xxx
₱
₱
xxx
xxx
xxx
xxx
xxx
Partnership
The business is owned by two or more persons called “Partners” who agrees
among themselves to contribute money or industry and to divide profit based on
their agreed profit and loss ratio. As there are two or more partners in a partnership
business, the capital account is called Partner’s Equity.
The capital structure of a Partnership business follows:
Partner’s Equity, beginning
Add: Partner’s Share in Profit
Total
Less: Partner’s, Drawing
Partner’s Equity, end
Partners
_______________________________________
A
B
Total
₱
xxx ₱
xxx ₱
xxx
xxx
xxx
xxx
₱
xxx ₱
xxx ₱
xxx
xxx
xxx
xxx
₱
xxx ₱
xxx ₱
xxx
FUNDAMENTALS OF ABM 2
DATE DEVELOPED:
JUNE 2020
STATEMENT OF CHANGES IN OWNERS
EQUITY
DEVELOPED BY:
MARIA CORINA A. DALEON
Page 7 of
20
Corporation
This is the biggest and most complicated form of business organization. This
is formed by at least five but not more than fifteen persons called incorporators.
Their capital is called “Share Capital” which is divided into units called shares. As
there are more than a hundred of owners which are called shareholders, their capital
account is called Shareholder’s Equity.
The capital structure of a Partnership business follows:
SHAREHOLDER’S EQUITY
Balance, January 1, 20B
Add: Changes in Equity:
Issuance of additional Share
Profit, 20B
Less: Dividends declared and paid
Balance, December 31, 20B
Share
Capital
₱xxx
Share
Premium
₱xxx
Accumulated
Profit/Loss
₱xxx
Total
xxx
xxx
xxx
xxx
____
₱xxx
____
₱xxx
xxx
₱xxx
xxx
₱xxx
₱xxx
Cooperatives
It is formed by fifteen (15) or more natural persons who are Filipino citizen, of
legal age, having a common bond of interest and are actually residing or working in
the intended area of operation, may organize a primary cooperative. The net surplus
of any cooperative shall not be construed as profit, but as an excess payment made
by the members for the loans borrowed or the goods and services availed by them.
As there are more than a hundred members in a cooperative, their capital account
is called Member’s Equity.
The capital structure of a Partnership business follows:
Subscribed Share Capital-ordinary
Add: General Reserved Fund
Cooperative Educational and Traning Fund
Optional Fund
Community Development Fund
Member’s Equity, End
₱xxx
₱ xxx
xxx
xxx
xxx
FUNDAMENTALS OF ABM 2
DATE DEVELOPED:
JUNE 2020
STATEMENT OF CHANGES IN OWNERS
EQUITY
DEVELOPED BY:
MARIA CORINA A. DALEON
xxx
₱ xxx
Page 8 of
20
Let’s do the activity!
Self - Check
Activity 1
Spin a Win: Agree or Disagree
Read each statement and decide whether you agree or disagree. Write your answer
in a separate sheet of paper.
___________ 1. The statement of Comprehensive Income presents Revenue and
Expense which are the temporary accounts of Owner’s Equity.
___________ 2. The preparation of Statement of Changes in Owner’s Equity depends
on what business organizations are formed.
___________ 3. Business organizations differ in terms of number of owners and
transferability of ownership.
___________ 4. The statement of Changes in Owner’s Equity shows the beginning
equity of the owner and withdrawal during the period.
___________ 5. Profit for the period which is shown as item in the Statement of
Changes in Owner’s Equity is taken from Statement of Comprehensive
Income.
___________ 6. Capital beginning plus additional investment less capital withdrawal
equals capital ending balance of the owner.
___________ 7. Five and above are considered owner(s) in partnership.
___________ 8. Sole Proprietorships are subjected to strict regulations.
___________ 9. The Statement of Comprehensive Income tells a specific story about
the owner’s stake in the company.
___________ 10. Joint Venture is one of the major forms of business organizations.
Activity 2
Identification.
1. Identify the key elements of statement of changes in equity.
2. Discuss a sole proprietorship, partnership, corporation, and cooperative as a
form of business organization.
FUNDAMENTALS OF ABM 2
DATE DEVELOPED:
JUNE 2020
STATEMENT OF CHANGES IN OWNERS
EQUITY
DEVELOPED BY:
MARIA CORINA A. DALEON
Page 9 of
20
FORMS OF BUSINESS ORGANIZATION
OBJECTIVES:
In this lesson, the learner is able to:

Prepare a Statement of Changes in Owner’s Equity for a single
proprietorship.
DISCUSSION:
How to Prepare Statement of Changes in Owner’s Equity?
We have previously presented to you the Statement of Partner’s Equity for
Partnership, Statement of Changes in Shareholder’s Equity for a Corporation and
Statement of Changes in Member’s Equity for Cooperatives.
This time, we will focus our studies in Statement of Owner’s Equity for Sole
Proprietorship business.
The Statement of Changes in Owner’s Equity is prepared by following these
steps:
Write the name of the business or the owner's name, title of the report
and date (for the priod ended).
• Step 1
Determine how much is beginning capital of the owner and how much is
profit. Then you add.
• Step 2
Combining steps 1 and 2, the Statement of Changes in Owner’s Equity will
appear as follows:
TUYO SUPERMART
Statement of Changes in Owner’s Equity
For the month ended January 31, 20A
J. Tuyo, Capital – Beginning
Add: Additional Investment
Profit for the month
Total
Steps 1 and 2
₱ 1,536,250
₱
70,000
70,000
₱ 1,606,250
FUNDAMENTALS OF ABM 2
DATE DEVELOPED:
JUNE 2020
STATEMENT OF CHANGES IN OWNERS
EQUITY
DEVELOPED BY:
MARIA CORINA A. DALEON
Page 10
of 20
Deduct the withdrawal of the owner and arrived at the capital balance of
the owner at the end of the month.
• Step 3
TUYO SUPERMART
Statement of Changes in Owner’s Equity
For the month ended January 31, 20A
Total
Less: Withdrawal
J. Tuyo, Capital – Ending
Steps 3
₱ 1,606,250
30,000
₱ 1,576,250
The complete Statement of Changes in Owner’s Equity is presented below:
TUYO SUPERMART
Statement of Changes in Owner’s Equity
For the month ended January 31, 20A
J. Tuyo, Capital – Beginning
Add: Additional Investment
Profit for the month
Total
Less: Withdrawal
J. Tuyo, Capital – Ending
₱ 1,536,250
₱
70,000
70,000
₱ 1,606,250
30,000
₱ 1,576,250
The Statement of Changes in Owner’s Equity answers the question on:
“What caused the Owner’s Equity of J. Tuyo to increase from ₱1,536,250 to
₱1,576,250”?
Looking at the Statement of Changes in Owner’s Equity, we say that the
beginning equity of J. Tuyo in the amount of ₱1,536,250 has increased to
₱1,576,250 caused by the “results of operations”. The amount of increase calculated
as follows:
Owner’s Equity, End
Owner’s Equity, Beg.
Increase in Owner’s Equity
₱1,576,250
1,536,250
₱
40,000
FUNDAMENTALS OF ABM 2
DATE DEVELOPED:
JUNE 2020
STATEMENT OF CHANGES IN OWNERS
EQUITY
DEVELOPED BY:
MARIA CORINA A. DALEON
Page 11
of 20
The increase in owner’s Equity by ₱40,000 is accounted for as follows:
Profit for the month (Increase in Owner’s Equity)
Less: Withdrawal (Decrease in Owner’s Equity)
Net Increase in Owner’s Equity
₱70,000
30,000
₱40,000
In an event wherein an owner’s withdrawal exceeds profit, there is a net
decrease in the Owner’s Equity; hence, Owner’s Equity ending balance will also
decrease.
FUNDAMENTALS OF ABM 2
DATE DEVELOPED:
JUNE 2020
STATEMENT OF CHANGES IN OWNERS
EQUITY
DEVELOPED BY:
MARIA CORINA A. DALEON
Page 12
of 20
Let’s do the activity!
Practical Exercises
Case 1
On January 2, 20A, Jera Murillo, CPA invested cash of ₱10,000 and a Laundry
Machine costing ₱150,000 in a laundry shop business. She incurred the following
expenses for the quarter ending 31 March 20A.
Supplies
Taxes and Licenses
Salaries Expense
Utilities Expense
₱
4,000
7,000
45,000
35,000
During the month of February, she withdrew from her business the amount of
₱2,000. If her capital balance at the end of the quarter was ₱109,000, how much
revenue that she earned?
Case 2
Mr. John De Los Santos, Capital at the beginning of the period was ₱300,000 and
Capital at the end was ₱299,030. He made profit of ₱9,030 and has withdrawn the
amount of ₱10,000.
a. Was there an increase or decrease in his capital balance?
Yes
No
b. If there was, by how much amount?
c. Account for the amount of increase or decrease in his capital by filling-up the
space provided:
Profit for the month
₱ _________________
Less: Withdrawal
___________________
Net Increase/Decrease in Owner’s Equity
₱ _________________
FUNDAMENTALS OF ABM 2
DATE DEVELOPED:
JUNE 2020
STATEMENT OF CHANGES IN OWNERS
EQUITY
DEVELOPED BY:
MARIA CORINA A. DALEON
Page 13
of 20
Case 3
The following data were taken from the records of Catarman Merchandising owned
by Mr. Benjamin Jamin.
Trial Balance
B. Jamin, Capital beginning
B. Jamin, Withdrawal
₱25,000
10,000
Statement of Comprehensive Income
Sales Revenue
Operating Expenses
₱80,000
85,000
Required:
Prepare Statement of Changes in Owner’s Equity for the month ended July
2018.
Case 4
The balance of the following account were taken from the records of Kris Suelan
Apparel for the period ended 31 January 2019.
K. Suelan, Capital – January 1
K. Suelan, Capital – January 31
Additional investment during the month
Loss from operation
Withdrawal
₱105,000
75,000
20,000
35,000
15,000
Required:
Statement of Changes in Owner’s Equity for the month ended January 31,
2019.
FUNDAMENTALS OF ABM 2
DATE DEVELOPED:
JUNE 2020
STATEMENT OF CHANGES IN OWNERS
EQUITY
DEVELOPED BY:
MARIA CORINA A. DALEON
Page 14
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Illustrative Problem
Before we are about to end this module, I want you to practice the ILLUSTRATIVE
PROBLEM below.
The following adjusted Trial Balance was prepared from Dorie Popera Grocery for
the month of December 2019. It uses perpetual inventory system of keeping
inventories
Dorie Popera Grocery
Adjusted Trial Balance
December 31, 2019
Cash in Bank
Accounts Receivable
Merchandise Inventory
Supplies Inventory
Furniture and Fixtures
Accumulated Depreciation
Accounts Payable
Accrued Salaries Expense
D. Popera, Capital
D. Popera, Drawing
Sales
Cost of Sales
Salaries Expense
Depreciation Expense
Taxes and Licenses
Total
Debit
875,000
42,000
190,000
24,000
215,000
Credit
2,500
59,000
3,000
1,251,000
30,000
560,000
45,000
2,500
12,000
₱1,995,500
680,000
___________
₱1,995,500
Required:
1. Prepare Statement of Comprehensive Income.
2. Prepare Statement of Changes in Owner’s Equity.
FUNDAMENTALS OF ABM 2
DATE DEVELOPED:
JUNE 2020
STATEMENT OF CHANGES IN OWNERS
EQUITY
DEVELOPED BY:
MARIA CORINA A. DALEON
Page 15
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End-of-Module Test
MULTIPLE CHOICE. Select the best of your choice.
1.
Which of the following is not one of the major forms of business organizations?
a. Sole Proprietorship
b. Partnership
c. Corporations
d. Joint Venture
2.
Which of the following are the major forms of business organizations?
a. Sole Proprietorship
b. Partnership
c. Corporations
d. All of the above
3.
How many people can own a sole proprietorship?
a. One
b. More than one
c. Two but not more than five
d. Five and above
4.
How many are considered owner(s) in partnership?
a. One
b. More than one
c. Two but not more than five
d. Five and above
5.
How are owners in a sole proprietorship called?
a. Sole proprietors
b. Partners
c. Shareholders/Stockholders
d. None of the above
6.
This account contains all net income and net loss incurred by the corporation
for the current and previous years?
a. Common Stocks
b. Retained Earnings
c. Additional Paid-in Capital
d. None of the above
7.
What is the owner in a corporation called?
a. Sole Proprietors
b. Partnerships
c. Shareholders/Stockholders
d. None of the above
8.
Which of the following are subjected to strict regulations?
FUNDAMENTALS OF ABM 2
DATE DEVELOPED:
JUNE 2020
STATEMENT OF CHANGES IN OWNERS
EQUITY
DEVELOPED BY:
MARIA CORINA A. DALEON
Page 16
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a.
b.
c.
d.
9.
Sole Proprietorship
Partnership
Corporations
None of the above
Which of the following is an advantage of a partnership as compared to a sole
proprietorship?
a. Unlimited liability
b. More sources of expertise
c. Concentration of management
d. Limited life
10. What is a financial statement that tells a specific story about the owner’s stake
in the company?
a. Statement of Financial Position
b. Statement of Comprehensive Income
c. Statement of Changes in Owner’s Equity
d. Statement of Cash Flow
FUNDAMENTALS OF ABM 2
DATE DEVELOPED:
JUNE 2020
STATEMENT OF CHANGES IN OWNERS
EQUITY
DEVELOPED BY:
MARIA CORINA A. DALEON
Page 17
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Performance Criteria Checklist
JOB Sheet 2
Learner’s Name: ________________________
Date: _________________
Criteria
Yes
No
1. Did I able to explain the basic concepts of the Statement of
Changes in Owner’s Equity?
2. Did I able to explain the major forms of business
organizations and their capital structure?
3. Did I able to prepare a Statement of Changes in Owner’s
Equity for a Sole Proprietorship?
Feedback:
_______________________________
Teacher’s Name and Signature
_____________________
Date
FUNDAMENTALS OF ABM 2
DATE DEVELOPED:
JUNE 2020
STATEMENT OF CHANGES IN OWNERS
EQUITY
DEVELOPED BY:
MARIA CORINA A. DALEON
Page 18
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Congratulations! You satisfactorily completed this
module.
Great job!
“Tell me and I forget.
Teach me and I remember.
Involve me and I learn”.
-
Benjamin Franklin
Yours truly,
FUNDAMENTALS OF ABM 2
DATE DEVELOPED:
JUNE 2020
STATEMENT OF CHANGES IN OWNERS
EQUITY
DEVELOPED BY:
MARIA CORINA A. DALEON
Page 19
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REFERENCES:
DepEd Curriculum Guide – K to 12 Most Essential Learning Competencies.
Rafael M. Lopez, Jr. (2017 Edition), Accountant, Reviewer and Accounting Professor,
Fundamentals of Accountancy, Business and Management 2.
Josefina L. Beticon, James Cristopher D. Domingo and Fermin Antonio D. Yabut
(Copyright 2016 by Vibal Group, Inc.) Fundamentals of Accountancy, Business and
Management 2. Department of Education – Bureau of Learning Resources (DepEdBLR).
FUNDAMENTALS OF ABM 2
DATE DEVELOPED:
JUNE 2020
STATEMENT OF CHANGES IN OWNERS
EQUITY
DEVELOPED BY:
MARIA CORINA A. DALEON
Page 20
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