5.3 Statement of changes in equity
Below is the statement of changes in equity for Cleopatra Ltd. The statement of changes in equity shows how the change in the equity section of the statement of financial position of a company has come about. It shows the increase due to profit for the year. It also shows the decrease due to dividend payments during the year. It would also show any increase due to new share issues.
| Shares | Retained earnings | Total equity | |
|---|---|---|---|
| £ | £ | £ | |
| Balance as at 1 March 20X8 | 80,000 | 33,300 | 113,300 |
| Dividends paid | ( 2,400) | ( 2,400) | |
| Total profit for the year | 76,200 | 76,200 | |
| Balance as at 28 February 20X9 | Total 80,000 | Total 107,100 | Total 187,100 |
You have now been introduced to the formats of the three main company financial statements: the statement of financial performance, the statement of financial position and the statement of changes in equity. To recap, the statement of financial performance shows, in detail, the company’s financial performance over the year and shows the profit or loss to be included in the retained earnings reserve in the statement of financial position and the statement of changes in equity.
Activity 12 Memorising financial statements formats
The purpose of this activity is to gain practice at writing out the financial statement formats and to memorise their layouts.
Write out by hand the headings of the layouts for:
- the statement of financial performance
- the statement of financial position
- the statement of changes in equity.
Do this a few times in order to memorise their layouts or formats.
Note that there is no feedback for this activity.