 The financial statements are prepared directly from the adjusted trial balance. The focus on this short video is the statement of owner's equity. After the income statement, we prepare the statement of owner's equity. This follows the income statement because net income is also included on this statement as net income increases owner's equity. So let's use the adjusted trial balance to complete the financial statements. We use owner's capital and owner's withdrawal from the trial balance and put that on the statement of owner's equity. Additionally, we will use net income from the income statement. The statement of owner's equity has the company name, the name of the financial statement, and the date which is always year-ended and then whatever the date is. This date is done exactly like the income statement. So the statement of owner's equity details the change in the owner's capital account for a period or range of time. Owner's capital from the adjusted trial balance is listed first. Then we add net income to increase owner's capital. Finally, we subtract owner's withdrawal, which decreases owner's capital. This gives us the ending owner's capital balance that will go on the balance sheet.