As a matter of fact, as a comparison, if cash and cash equivalents is the account that changes most often, equity accounts, like share capital and reserves, are the ones that change the less. Continue reading
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 (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
Statement of changes in owner’s equity is something you’d prepare rarely, and if required, once a year when you’re preparing your Annual Report, at least. Continue reading
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
What are those other reserves there sometimes are on the statement of changes in owner’s equity? Besides share capital, retained earnings and share premium it’s possible an entity also has an account labeled as Other reserves. What’s that about? Continue reading
What’s this ‘retained earnings’ we hear often talked about? It’s retained, that is it’s kept unused for a period of time, that’s for one, but what does it comprise of? What is being retained? Continue reading