Statement of Owner’s EquityStatement of Owner’s Equity

o The first item presented on the statement of The first item presented on the statement of owner’s equity is the balance of the owner’s owner’s equity is the balance of the owner’s capital account at the beginning of the period.capital account at the beginning of the period.

FINANCIAL STATEMENT FINANCIAL STATEMENT PREPARATION FROM END-PREPARATION FROM END-

OF-PERIODOF-PERIODSPREADSHEET – STATEMENT SPREADSHEET – STATEMENT

OF OWNER’S EQUITYOF OWNER’S EQUITY from the income statement

to the balance sheet

Statement of Owner EquityStatement of Owner Equity

o BeginningBeginning Owner Equity Owner Equity

o + Net Income+ Net Income

o - Withdrawals- Withdrawals

o + Contributions+ Contributions

o - Distributions- Distributions

o +/- Change in Valuation+/- Change in Valuation

o = = EndingEnding Owner Equity Owner Equity

Balancing a CheckbookBeginning Equity+/- Activity= Ending Equity

Securities for InvestmentsSecurities for Investments

� Investment in debt securities: include Investment in debt securities: include U.S. treasury securities, municipal U.S. treasury securities, municipal securities, corporate bonds, commercial securities, corporate bonds, commercial papers, pf stock with a mandatory papers, pf stock with a mandatory redemption feature or redeemable at the redemption feature or redeemable at the option of the holder.option of the holder.

� Investment in equity securities: include Investment in equity securities: include common stock, preferred stock, stock common stock, preferred stock, stock warrants, stock rights, call and put warrants, stock rights, call and put options.options.

Securities for Investments(cont.)Securities for Investments(cont.)

� For reporting purposes, all For reporting purposes, all investments must be classified into investments must be classified into one of the following three categories one of the following three categories at the reporting date:at the reporting date:

1. Trading securities;1. Trading securities;

2. Available-for-sale securities; or2. Available-for-sale securities; or

3. Held-to-maturity securi3. Held-to-maturity securities.ties.

Classification of InvestmentsClassification of Investments

1.Trading securities: investments in 1.Trading securities: investments in debt and equity securities held for debt and equity securities held for the purpose of selling them in the the purpose of selling them in the near future.near future.

2. Available-for-sale securities: 2. Available-for-sale securities: Including debt and equity securities Including debt and equity securities that are not classified as trading that are not classified as trading securities and not classified as held-securities and not classified as held-to-maturity securities. to-maturity securities.

Classification of Investments (cont.)Classification of Investments (cont.)

3.Held-to-maturity securities: 3.Held-to-maturity securities: investments in investments in debtdebt securities with securities with positive intent and ability to hold positive intent and ability to hold these securities to maturity.these securities to maturity.

Classification of Investments (cont.)Classification of Investments (cont.)

� Classifications of investments in Classifications of investments in securities into these three securities into these three categories and the subsequent categories and the subsequent reclassification are based on reclassification are based on management’s intent and management’s intent and judgment.judgment.