Fundamentals of
Accounting, Business and
Management 2
Quarter 1 – Module 3:
Statement of Changes in
Equity (SCE)
Introductory Message
For the facilitator:
Welcome to the Fundamentals of Accounting, Business and Management 2 –
Grade 12 Alternative Delivery Mode (ADM) Module on the Statement of Changes in
Equity (SCE)!
This module was collaboratively designed, developed, and reviewed by
educators both from public and private institutions to assist the teacher or facilitator
in helping the learners meet the standards set by the K to 12 Curriculum while
overcoming their personal, social, and economic constraints in schooling.
This learning resource hopes to engage the learners into guided and
independent learning activities at their own pace and time. Furthermore, this also
aims to help learners acquire the needed 21st century skills while taking into
consideration their needs and circumstances.
In addition to the material in the main text, you will also see this box in the
body of the module:
Notes to the Teacher
This contains helpful tips or strategies that
will help you in guiding the learners.
As a facilitator you are expected to orient the learners on how to use this
module. You also need to keep track of the learners' progress while allowing them to
manage their own learning. Furthermore, you are expected to encourage and assist
the learners as they do the tasks included in the module.
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For the learner:
Welcome to the Fundamentals of Accounting, Business and Management 2 –
Grade 12 Alternative Delivery Mode (ADM) Module on the Statement of Changes in
Equity (SCE)!
The hand is one of the most symbolized part of the human body. It is often
used to depict skill, action and purpose. Through our hands we may learn, create,
and accomplish. Hence, the hand in this learning resource signifies that you as a
learner is capable and empowered to successfully achieve the relevant competencies
and skills at your own pace and time. Your academic success lies in your own hands!
This module was designed to provide you with fun and meaningful
opportunities for guided and independent learning at your own pace and time. You
will be enabled to process the contents of the learning resource while being an active
learner.
This module has the following parts and corresponding icons:
What I Need to Know This will give you an idea of the skills or
competencies you are expected to learn in the
module.
What I Know This part includes an activity that aims to
check what you already know about the
lesson to take. If you get all the answers
correct (100%), you may decide to skip this
module.
What’s In This is a brief drill or review to help you link
the current lesson with the previous one.
What’s New In this portion, the new lesson will be
introduced to you in various ways such as a
story, a song, a poem, a problem opener, an
activity or a situation.
What is It This section provides a brief discussion of the
lesson. This aims to help you discover and
understand new concepts and skills.
What’s More This comprises activities for independent
practice to solidify your understanding and
skills of the topic. You may check the
answers to the exercises using the Answer
Key at the end of the module.
What I Have Learned This includes questions or blank
sentence/paragraph to be filled in to process
what you learned from the lesson.
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What I Can Do This section provides an activity which will
help you transfer your new knowledge or skill
into real life situations or concerns.
Assessment This is a task which aims to evaluate your
level of mastery in achieving the learning
competency.
Additional Activities In this portion, another activity will be given
to you to enrich your knowledge or skill of the
lesson learned. This also tends retention of
learned concepts.
Answer Key This contains answers to all activities in the
module.
At the end of this module you will also find:
References This is a list of all sources used in developing
this module.
The following are some reminders in using this module:
1. Use the module with care. Do not put unnecessary mark/s on any part of the
module. Use a separate sheet of paper in answering the exercises.
2. Don’t forget to answer What I Know before moving on to the other activities
included in the module.
3. Read the instruction carefully before doing each task.
4. Observe honesty and integrity in doing the tasks and checking your answers.
5. Finish the task at hand before proceeding to the next.
6. Return this module to your teacher/facilitator once you are through with it.
If you encounter any difficulty in answering the tasks in this module, do not
hesitate to consult your teacher or facilitator. Always bear in mind that you are
not alone.
We hope that through this material, you will experience meaningful learning and
gain deep understanding of the relevant competencies. You can do it!
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What I Need to Know
STATEMENT OF CHANGES IN EQUITY (SCE)
This module is about the elements of a statement of changes in equity. It is
the simplest financial statement to prepare.
At the end of the lessons, you should be able to:
1. Prepare a Statement of Changes in Equity (SCE) for a single proprietorship
(ABM_FABM12-Ie-9)
a. Identify the accounts under SCE.
What I Know
As you remember, there is a quick overview of the Statement of Changes in
Equity in FABM1. Let’s test if you can still recall the basics of SCE.
Identify the accounts/terms being described. Write it in a separate answer
sheet.
1. It is the account bearing the name of the owner.
2. This account represents the withdrawals made by the owner from the
business.
3. It is the investment that is gradually added through to the business by the
owner during the course of operation.
4. Drawings of the owner in the business can either be cash or .
5. The owner’s equity is a result of original and additional investment decreased
by the withdrawals of the owner and increased/decreased by .
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Lesson
Statement of Changes in
1 Equity (SCE)
The statement of changes in equity shows the changes made by the owner as
a result of additional investment, or withdrawals increased or decreased by net
income or loss.
CAPITAL is the account that bears the name of the owner. It represents the
original and additional investment increased by net income. It is also decreased by
cash or asset withdrawal and net loss.
*Original investment is the owner’s initial investment when the business
started from scratch.
*Additional investment is the investment that is gradually added through to
the business by the owner during the course of operation.
DRAWINGS is the withdrawals made by the owner. It can either be cash or
other assets.
Illustration:
Pedal Bike Parts has a beginning capital for the month amounting to P
300,000, an additional investment of P 15,0000, and a net income of P 44,900. Mr.
Pedal also made withdrawals amounting to P 20,000. Prepare a statement of changes
in equity for June 30, 2020.
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PEDAL BIKE PARTS
Statement of Changes in Equity For the
Month Ended June 30, 2020
Pedal, Capital, 6/1/20 ₱ 300,000
Add: Additional Investments ₱ 15,000
Net Income 44,900 59,900
Total ₱ 359,900
Less: Withdrawals 20,000
Pedal, Capital, 6/30/20 ₱ 339,900
What’s In
Too easy right? You have just finished the basics of the statement of changes
in equity. Let’s learn more about these exercises.
1. Compute for the missing figures.
ABM MERCHANDISE
Statement of Changes in Equity For the
Month Ended Jan 31, 2020
Magaling, Capital, 1/1/20 ₱ 188,900
Add: Additional Investments ₱ 21,390
Net Income ??? 53,830
Total ???
Less: Withdrawals 42,730
Magaling, Capital, 1/31/20 ???
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2. Prepare a statement of changes in equity.
ABM Merchandise has a beginning capital for the month amounting P
25,000, an additional investment of P 15,000, and a net income of P 10,000. Ms.
Magaling also makes withdrawals amounting to P 3,000. Prepare a statement of
changes in equity for January 31, 2020.
Notes to the Teacher
It may be easy as it looks but remember that computing owner’s
equity needs to be accurate because its ending account is needed
to balance the statement of financial position.
What’s New
Study the financial statements of ABM Consultancy Services below. Given
are the statement of financial position. Notice that the financial position lacks the
owner’s equity amount.
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ABM CONSULTANCY SERVICES STATEMENT OF
FINANCIAL POSITION
As of June 30, 2020
ASSETS
CURRENT ASSETS
CASH ₱ 20,000
ACCOUNTS RECEIVABLE 10,000
MERCHANDISE INVENTORY 150,000
SUPPLIES 5,000
PREPAID RENT 15,000
PREPAID INSURANCE 5,000
TOTAL CURRENT ASSETS ₱ 205,000
NON-CURRENT ASSETS
PROPERTY, PLANT AND EQUIPMENT
SERVICE VEHICLE ₱ 50,000
LESS: ACCUMULATED DEPRECIATION 4,000 46,000
STORE EQUIPMENT 35,000
LESS: ACCUMULATED DEPRECIATION 6,000 29,000 75,000
TOTAL ASSETS ₱ 280,000
LIABILITIES and OW NER'S EQUITY
CURRENT LIABILITIES
NOTES PAYABLE ₱ 30,000
ACCOUNTS PAYABLE 20,000
SALARIES PAYABLE 10,000
UTILITIES PAYABLE 5,000
INTEREST PAYABLE 7,000
UNEARNED REVENUES 5,000
TOTAL CURRENT LIABILITIES ₱ 77,000
NON-CURRENT LIABILITIES
MORTGAGE PAYABLE 150,000
OW NER'S EQUITY
MAGALING, CAPITAL 6/30/2020 ???
TOTAL LIABILITIES AND OW NERS EQUITY ???
To fill this, let’s try to prepare the statement of changes in equity for ABM
Consultancy Services. Given are the accounts balances below:
Magaling, Capital, 6/1/20 ₱ 150,000
Additional Investments 20,000
Net Income 209,000
Withdrawals 326,000
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What is It
The previous activity shows that the owner’s equity account is needed to
balance the financial position. Below is an illustration of how these statements linked
to each other.
ABM CONSULTANCY SERVICES STATEMENT OF
COMPREHENSIVE INCOME FOR THE YEAR ENDED JUNE
30, 2020
ABM CONSULTANCY SERVICES
Consultancy Fee ₱ 323,000
Statement of Changes in Equity For the
Other Income
Rent Income ₱ 10,000 Month Ended June 30, 2020
Dividends Income 6,000
Gain On Sale Of Equipment 12,000 Magaling, Capital, 6/1/20 ₱ 150,000
Interest Income 5,000 33,000 Additional Investments ₱ 20,000
Add:
Total Income ₱ 356,000
Net Income 209,000 229,000
Expenses Total ₱ 379,000
Salaries 98,000 Less: Withdrawals 326,000
Rent 10,000 Magaling, Capital, 6/30/20 ₱ 53,000
Depreciation 7,000
Supplies 4,000
Insurance 10,000
Loss On Sale Of Equipment 3,000
Interest Expense 15,000 147,000
Net Income ₱ 209,000
ABM CONSULTANCY SERVICES
STATEMENT OF FINANCIAL POSITION
As of June 30, 2020
ASSETS
CURRENT ASSETS
CASH ₱ 20,000
ACCOUNTS RECEIVABLE 10,000
MERCHANDISE INVENTORY 150,000
SUPPLIES 5,000
PREPAID RENT 15,000
PREPAID INSURANCE 5,000
TOTAL CURRENT ASSETS ₱ 205,000
NON-CURRENT ASSETS
PROPERTY, PLANT AND EQUIPMENT
SERVICE VEHICLE ₱ 50,000
LESS: ACCUMULATED DEPRECIATION 4,000 46,000
STORE EQUIPMENT 35,000
LESS: ACCUMULATED DEPRECIATION 6,000 29,000 75,000
TOTAL ASSETS ₱ 280,000
LIABILITIES and OW NER'S EQUITY
CURRENT LIABILITIES
NOTES PAYABLE ₱ 30,000
ACCOUNTS PAYABLE 20,000
SALARIES PAYABLE 10,000
UTILITIES PAYABLE 5,000
150,000
INTEREST PAYABLE 7,000
UNEARNED REVENUES 5,000
TOTAL CURRENT LIABILITIES ₱ 77,000
53,000
NON-CURRENT LIABILITIES ₱ 280,000
MORTGAGE PAYABLE 150,000
OW NER'S EQUITY
MAGALING, CAPITAL 6/30/2020 ???
TOTAL LIABILITIES AND OW NERS EQUITY ???
The P209,000 net income is needed to prepare the owner’s equity statement.
Meanwhile, the ending balance of P 53,000 in equity is used to balance the statement
of financial position. The financial position is now balanced at P 280,000 for both
total assets and total liabilities, and owner’s equity.
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What’s More
ENRICHMENT ACTIVITY 1
Saranghae Records Studio has a beginning capital amounting P 250,000, an
additional investment of P 150,000, and a net income of P 125,000. Ms. Gummy also
makes withdrawals amounting to P 78,000. Prepare the statement of changes in
equity for February 28, 2020.
ENRICHMENT ACTIVITY 2
PetMalu Animal Grooming Services has the following accounts. Prepare
month-end statement of changes in equity.
Malou, Capital, 6/1/20 ₱ 29,321
Additional Investments 23,854
Net Income 154,223
Withdrawals 32,911
What I Have Learned
What are the accounts in the statement of changes in equity? Describe briefly.
1.
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2.
3.
What I Can Do
Practice makes perfect! Let’s do more!
Application #1: Below are the accounts of MMK Review Center. Prepare a statement
of changes in equity for June 30, 2020.
Santos, Capital, 6/1/20 ₱ 1,234,876
Additional Investments 520,345
Net Income 909,648
Withdrawals 234,674
Application #2: Below are the accounts of Malasa Bake Shop. Prepare a statement of
changes in equity for June 30, 2020.
Malasa, Capital, 6/1/20 ₱ 304,456
Additional Investments 20,005
Net Income 99,621
Withdrawals 23,691
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Application #3: Complete the statement of changes in equity.
MISS CHEESE PUBLICATION
Statement of Changes in Equity
For the Month Ended June 30, 2020
Keso, Capital, 6/1/20 ₱ (1)
Add: Additional Investments ₱ 11,000
Net Income 34,000 (2)
Total ₱ 77,900
Less: Withdrawals 8,700
Keso, Capital, 6/30/20 ₱ (3)
Assessment
A. Prepare a statement of changes in equity.
Fabienne Talent Agency has a beginning capital amounting P 1,250,000, an
additional investment of P 550,000, and a net income of P 725,000. Ms. Fabienne
also makes withdrawals amounting to P 380,000. Prepare a statement of changes in
equity for March 31, 2020.
B. Here are the accounts of Aurulent Citrine Pawnshop. Prepare a statement of
changes in equity for May 31, 2020.
Dizon, Capital, 5/1/20 ₱ 3,890,000
Additional Investments 5,432,000
Net Income 2,004,000
Withdrawals 500,000
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C. Complete the statement of changes in equity.
MURA MALL, INC.
Statement of Changes in Equity
For the Month Ended June 30, 2020
Mahal, Capital, 6/1/20 ₱ (1)
Add: Additional Investments ₱ 234,000
Net Income 374,000 (2)
Total ₱ 1,000,000
Less: Withdrawals 238,700
Mahal, Capital, 6/30/20 ₱ (3)
Additional Activities
A. Prepare a statement of changes in equity.
Daniella Mobile Games has a beginning capital amounting P289,000, an
additional investment of P398,000, and a net income of P259,000. Ms. Daniella also
makes withdrawals amounting to P 56,000. Prepare a statement of changes in equity
for May 31, 2020.
B. Complete the statement of changes in equity.
KAMOTE FARMING SUPPLIES
Statement of Changes in Equity
For the Month Ended April 30, 2020
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Sweet, Capital, 4/1/20 ₱ (1)
Add: Additional Investments ₱ 32,000
Net Income (2) 79,000
Total ₱ 123,000
Less: Withdrawals 35,000
Sweet, Capital, 4/30/20 ₱ (3)
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References
Ballada, Win. 2005. Basic Accounting Made Easy. DomDane Publisher & Made Easy
Books.
Bragg, Steven. 2018. Accounting Tools. october 7.
https://www.accountingtools.com/articles/2017/5/10/furniture-and-
fixtures#:~:text=Furniture%20and%20fixtures%20are%20larger,on%20an%2
0organization's%20balance%20sheet.
Ong, Flocer Lao, and Janelle Gomendoza. 2017. Fundamentals of Accounting, Business and
Management 2 for Senior High School. C & E Publishing, Inc.
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