Statement of Owner’s Equity
A Statement of Owner’s Equity is a summary of the changes in the owner’s equity that have occurred as a result of the business transactions of a specified period. It forms the link between the income statement and the balance sheet.
The Owner’s Equity is prepared:
- After the income statement is prepared because the net income or net loss for the period must be reported in this statement.
- Before the balance sheet is prepared because the amount of owner’s equity at the end of the period must be reported on the balance sheet.
- At the end of the accounting period.
The Owner’s Equity is:
- Increased by amounts invested by the owner and is decreased by withdrawals by the owner.
- Increased by revenues and decreased by expenses.