---
title: "Statement of changes in equity"
description: "What the statement of changes in equity shows, its columns and rows, how profit, dividends and capital contributions move equity, with a simple worked example."
canonical: https://ledgeriano.com/glossary/statement-of-changes-in-equity
language: en
publisher: "Ledgeriano"
updated: 2026-11-06
---

# Statement of changes in equity

> What the statement of changes in equity shows, its columns and rows, how profit, dividends and capital contributions move equity, with a simple worked example.

The statement of changes in equity shows how each component of equity, such as share capital, reserves and retained earnings, moved from the start to the end of a period. It reports profit or loss for the period, other comprehensive income, dividends and capital contributions or withdrawals, and reconciles opening to closing equity.

It is usually laid out as a grid: columns for each equity component and a total, rows for each kind of movement. The closing figures match the equity section of the balance sheet, and the profit row matches the bottom line of the income statement, so it ties the statements together.

Owners and lenders use it to see whether the business is retaining enough of its profit, how much was paid out, and whether new capital came in. For owner-managed companies it also makes drawings and capital injections visible.

Errors here usually come from booking dividends or owner withdrawals as expenses. They are distributions of equity, not costs, and belong in this statement rather than the income statement.

## Example: one year of equity movements

Profit of 38,000, a dividend of 12,000 and a capital contribution of 10,000 take total equity from 89,000 to 125,000.

|  | Share capital | Retained earnings | Total |
| --- | --- | --- | --- |
| Opening balance | 50,000 | 39,000 | 89,000 |
| Profit for the year |  | 38,000 | 38,000 |
| Dividends paid |  | (12,000) | (12,000) |
| Shares issued | 10,000 |  | 10,000 |
| **Closing balance** | **60,000** | **65,000** | **125,000** |

### Is the statement of changes in equity required?

Under full IFRS, yes, as one of the primary statements. IFRS for SMEs allows a combined statement of income and retained earnings in some cases.

### Where do owner drawings go?

In a sole proprietorship or partnership they reduce owner's capital and appear in this statement, not as an expense.

Guide: https://ledgeriano.com/guides/financial-statements