The purpose of a statement of changes in equity is to furnish shareholders with information that can further inform their investment strategy. Although it can be added to other types of financial statements, it is usually presented on its own. The statement begins with the opening equity balance for the period, adding and subtracting items over time such as profits and dividend payments to get to the closing balance for the period. ![]() It provides an account of how equity moves through the business throughout the reporting period (usually one year). What is a statement of changes in equity?Ī statement of changes in equity is, for many businesses, the missing link between their income statements and their balance sheet. Here, we’ll look at everything you need to know about your statement of changes in equity, why they’re important, and how to prepare one. Yet a statement of changes in equity can be an invaluable tool in providing shareholders with an understanding of equity movement within your company, so they can make prudent and informed decisions. Too many companies neglect to carry one out. ![]() A statement of changes in equity is not considered essential by many businesses. Yet, while some (like income and cash flow statements) come to mind easily, others are less obvious. Regular and accurate reporting is crucial to maintaining good financial health.
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