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14 Cards in this Set
- Front
- Back
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What does this statement show?
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- shows the movements that have taken place in an entity's equity during the financial period
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What does this statement relate to?
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A period of time rather than a point of time
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What must this statement disclose?
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- opening and closing balances of each category of equity (usually only two; share capital and retained earnings) but can be more
- the profit or loss for the year - contributions, or withdrawals of capital by the owners; AND distributions to owners (drawings/dividends) |
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Equity
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Owners' residual claim on net assets
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Net Assets
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Total assets - total liabilities
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What is net assets another name for?
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Owners' Equity
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What does this statement show>
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- a reconciliation of the period
- any additional share capital - any dividends paid: Distributions to the owners are NOT treated as an expense in the income statement - other reserves |
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What two main categories are there?
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- Share Capital/Contributed Capital
- Retained Earnings |
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Share Capital/Contributed Capital
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- represents the total amount invested in the entity by the owners (i.e. owner contribution)
- this usually only increases and only decreases in the case of liquidation |
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Retained Earnings
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- represents the cumulative net profit of the entity that has been retained for use within the business and not yet paid out to the owners
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What is the retained earnings called if it is negative (i.e. a loss)?
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Accumulated Losses
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What does it mean if the retained earnings balance is negative or zero?
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The company is not allowed by law to pay out dividends
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Who separates the two categories?
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A company; a sole trader/partnership may but doesn't have to
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What things can you have other than retained earnings?
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Some gains that should not be included in profit and instead go straight to equity (into other reserve accounts)
E.g. Asset Revaluation Reserve Share Premium Reserve Foreign Currency Translation Reserve |
