How to Change an Owner's Equity Statement
The statement of owner's equity is a fourth financial statement common in small businesses --- often partnerships or sole proprietorships. Owners prepare this statement to indicate changes between the owner's investment account and net income. Accountants often need to prepare this statement or approve it once it is completed. Making a change to this statement is necessary if the information is incorrect or accountants determine a change will benefit stakeholders using the statement of owner's equity.
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Instructions
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1
Review the statement of owner's equity as prepared. Look for additional owner investments, draws or net income changes that affect this statement.
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Compute the changes to adjust the current statement of owner's equity.
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Change the figures on the current statement. For example, add additional owner investments or subtract owner draws.
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Calculate the new total for the updated statement of owner's equity. Start with the current capital balance, add investments and net income then subtract draws to figure the ending balance.
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Issue a disclosure to state why the statement needed an adjustment or update. This informs the stakeholder on the need for changes.
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Tips & Warnings
The net income on the statement of owner's equity comes from the company's income statement. The total from the statement of owner's equity will appear on the company's balance sheet under the owner's equity section.
