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Changes in Equity Worksheet, Statement of Changes in Equity M1

Owner’s wealth or equity can be defined by the portion of assets remaining after creditor’s claims have been satisfied, namely: Equity = Assets - Liabilities. It is also known as Net Assets. Any increase or decrease in income adds or subtracts from owner’s wealth respectively.

Operation one (O1) is the initial capital investment by the owners of the business. This transaction is entered with a positive sign in the Changes in Equity worksheet below.

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