Category Archives: 4.6 Statement of Changes in Equity

Account that changes most often within equity

Accounts within the equity that change most often are those which have their figures being changed without any specific decision required from the owners alongside with legislative bureaucracy. Whilst making payments into share capital and other reserves are structured by agreements between owners (if there are any), by articles of association and so on, there’s an account that changes without any of this.  Continue reading

Reporting on paying dividends

Reporting (and accounting) for paying dividends is in fact rather straight forward.

Say that during the reporting period your company paid dividends in the amount of 2,100 as within our example statement of changes in equity. Reporting and recognizing an accounting entry on paying dividends whilst the equity has several accounts is done from one account only. Payments out of other equity accounts are labelled as ‘payments out of equity’ or something similar, but normally not ‘dividends’. As dividends refer to payments out of something that has been earned, payment of dividends is always done out of ‘retained earnings.  Continue reading

What’s the share premium used for?

As you’ve noticed, our equity includes a line item called as ‘Share premium’. What is this premium?

A share premium comes into the equation once we decide to pay contributions into the share capital. A mere payment into the capital is of course an option but as it is, there are often times when it’s not wise to put all the money into the capital due to reasons we’ve mentioned before.  Continue reading