ZIMSEC O Level Principles of Accounting: 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┬áStatement 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:
    1. Ordinary Share Capital
    2. Share Premium
    3. 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 CapitalShare Premium

Revaluation Reserve

Retained Earnings


Balance b/dxxxxxxxxxxxxxxx
Surplus on Revaluation--xx-xxx
Net profit for the period---xxxx
Dividends paid---(xx)(xx)
Issue of share capitalxxxxx--xxxx
Balance c/d






  • 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