Cambridge IGCSE Accounting(0452)/O Level Principles of Accounts(7110) Notes: Accounting for Limited Liability Companies: Statements of Changes in Equity
- Besides the Statement of Financial Position and Income Statement
- Companies are also required to prepare a Statement of Changes in Equity
- This statement as implied by its name shows changes in equity from the beginning to the end of the year
- Equity is typically made of:
- Ordinary Share Capital
- Share Premium
- Reserves and Retained Earnings
- The Statement in Changes in Equity shows for each of the above items:
- The balance at the beginning of the year (period)
- Balances at the end of the year
- Changes or reasons for any differences in the two balances
NB Share premium is the amount obtained when shares are sold above their face value as often happens
- Below is the typical structure of a Statement in Changes in Equity
XX Ltd
Statement of Changes in Equity for the year ended 31 December 20×8
| Share Capital | Share Premium $ | Revaluation Reserve $ | Retained Earnings $ | Total $ |
|
| Balance b/d | xxxx | xx | xxx | xx | xxxx |
| Surplus on Revaluation | - | - | xx | - | xxx |
| Net profit for the period | - | - | - | xx | xx |
| Dividends paid | - | - | - | (xx) | (xx) |
| Issue of share capital | xxx | xx | - | - | xxxx |
| Balance c/d | xxx | xxx | xxx | xxx | xxxx |
- The narration Balance b/d can also be given as Balance at the begging of the year instead
- The narration Balance c/d can also be given as Balance at the end of the year instead
