Equity means capital and change in equity statement tells about all modification in equities. Business has two types of equities one is owner equity and the second is debt equity. In very rare situation business has one type of equity. This statement helps in calculation of in flow and out flow of equity. It tells about liabilities, debts and total capital. Equity also depends upon total number of issued shares. Equity contains the common and deferred shares and also debentures. This statement contains all factors that reduce equity and also that factors that increase equity. It helps the business man for calculation of net equity. It often referred to as Statement of Retained Earnings in U.S. GAAP. It has details of the change in owners’ equity over an accounting period by presenting the movement in reserves comprising the shareholders’ equity. It usually has following basic elements in it: opening balance (balance of shareholders’ equity reserves at the start of the comparative reporting period), effect of changes in accounting policies, effect of correction pf prior period error (it is an adjustment to opening reserves), restated balance, changes in share capital, dividends, income/loss for the period, changes in revaluation reserve, other gains and losses and closing balance.
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