Introduction

Basically the Statement of Changes in Owner’s Equity shows the initial and ending balanced of the shareholder’s equity for a period as well as the items that causes the net change including an increase due to investments by the owner and /or net income. Furthermore, this statement also shows any decrease due to the withdrawal by the owner and/or net loss. Where on the other hand, Statement of Cash Flow provides the description about the sources and the uses of cash for a reporting period. Basically cash flows are classified as being caused by the operating, investing and financing activities. Moreover, this statement also gives information related to the beginning, ending and change in the cash.

Statement of Changes in the Equity of Checkers Restaurant

This statement of changes in the equity of checkers restaurant shows a movement in the owner’s funds during the pass two years, which are mainly distributed as following:
Paid-up Capital, which is the Sum paid by the Shareholders to the Company at the time of issue of shares initially.
General Reserves are the profits retained by the Company not for specific purposes and not distributed to the shareholders.
Capital Reserves are the profits set aside by the Company for some specific expenditure in the coming periods.
Inappropriate Profits are the profits left over after distribution to the shareholders and to the reserves accounts

Therefore, the Statement of Changes in Equity shows that the shareholders (Owners) of the Checkers Restaurant had equity of $ 86.041 million at the start of year 2002. This is the Paid-up Capital of $ 80.0 million and Inappropriate Profit of $ 6.041 million.

Furthermore, throughout the year 2003 Checkers Restaurant earned $16.410 million from which $ 10.0 million were paid to the shareholders (Owners) as dividend on their investment. Total equity of the Shareholders at the end of year 2003 was therefore, $ 92.450 million that is $ 80 million Paid-up Capital and $ 12.450 million Inappropriate Profits

Moreover, for the duration of the year 2003 Checkers earned a profit of $ 20.646 million out of which $ 12.0 million was distributed as dividend and $ 20.0 million were transferred to the General Reserve Account. Thus accumulating $ 101.096 of the shareholders (Owners) Funds at the end of year 2003. This is the Paid up Capital of $ 80 million, Inappropriate Profit of $ 1.096 million and General Reserves of $ 20 million.

Statement of Cash Flows Of the Checkers Restaurant

As it is the statement of any organization showing the inflow and out flow of cash during a specific period it has does not deal with the profit and losses of the organization. Cash Flows that are form the operating activities include the payment to creditors or recovery from the debtors. While the Cash flows from investing activities include the sale or purchase of land or any other immoveable property. Lastly the Cash lows related to the financing activities include the new issues of share capital and the payment of finance lease.

So the evaluation of the Cash Flow of the Checkers Restaurant for the year 2003 generated cash of $ 45,102 out of the daily operations of the restaurant. This amount was spent for the purchase of new fixed assets and paying back the loan of the Bank. However, in the beginning of the year the restaurant had a positive cash balance and at the end of the year after spending on all the items they still had a favorable balance of $ 4,414.