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Statement of Owner’s Equity.

The second report in Exhibit 2.11 is the statement of owner’s equity for Finlay Interiors. Its heading lists the month as January 2001 because this statement describes events that happened during that month. The beginning balance of equity is measured as of the start of business on January Lit is zero because Finlay Interiors did not exist before then. An existing business reports the beginning balance as of the end of the prior reporting period (such as December 31 fora continuing business). Pinlay Interiors’ statement shows that $30,000 of equity is created by Finlay’s initial investment. It also shows the $2,400 of net income earned during the month. This item links the income statement to the statement of owner’s equity. The statement also reports Finlay s $600 withdrawal and Finlay Interiors’$31,800 equity balance at the end of the month.