Owner’s Equity Statement

Owner’s Equity Statement

Owner’s Equity Statement

The owner’s equity statement reports the changes in owner’s equity for a specific period of time. The time period is the same as that covered by the income statement. Data for the preparation of the owner’s equity statement come from the owner’s equity columns of the tabular summary and from the income statement. The first line of the statement shows the beginning owner’s equity amount (which was zero at the start of the business). Then come the owner’s investments, net income (or loss), and the owner’s drawings. This statement indicates why owner’s equity has increased or decreased during the period.

Income Statement

What if Softbyte had reported a net loss in its first month? Let’s assume that during the month of September 2012, Softbyte lost $10,000. Illustration below shows the presentation of a net loss in the owner’s equity statement.

Owner's Equity Statement

If the owner makes any additional investments, the company reports them in the owner’s equity statement as investments.