Statement of changes in equity

Imagine you have a toy box where you keep all your toys. Now, let's say that you got a new toy and you want to keep track of all the changes that happen to your toy box after getting that new toy. The statement of changes in equity is like a record book that helps you keep a track of all the changes that happen to your toy box.

Similarly, businesses have something called equity which is like the toy box. It's the money that the owners have invested in the business. The statement of changes in equity helps a business keep track of all the changes that happen to their equity.

For example, let's say that a business starts with $10,000 of equity. Then, they make a profit of $2,000. So, their equity is now $12,000. The statement of changes in equity will show how the equity changed from $10,000 to $12,000.

But that's not all. There are other things that can change the equity too. For example, if the owners decide to take some money out of the business or if the business issues new shares of stock, that will also change the equity. The statement of changes in equity keeps track of all these changes.

Overall, the statement of changes in equity is like a record book that shows how the equity of a business changes over time.