The statement of financial position is another term for the balance sheet. The statement lists the assets, liabilities, and equity of an organization as of the report date. As such, it provides a snapshot of the financial condition of a business as of a specific date. It is one of the financial statements, and so is commonly presented alongside the income statement and statement of cash flows.
2. Definition
The statement of financial position is a
list of balances arranged according to
whether they are assets, capital or
liabilities and so depict the financial
situation on a specific date.
3. The Statement Of Financial Position
The statement of financial position used to
be called the balance sheet.
The statement of financial position
contains details of assets, liabilities and
capital – all those accounts with balances
that were not included in the income
statement.
The statement of financial position is not
part of the double entry system.
4. The format for a statement of
financial position
Non-current assets – assets that are:
Not bought primarily to be sold.
Bought to be used in the business.
Are expected to be of use in the business
for a long time.
Non-current assets are listed first in the
statement of financial position starting
with those the business will keep the
longest.
5. Current assets – assets that are:
Likely to change in the short term and
certainly within 12 months.
Include: items held for resale, accounts
receivable, cash in the bank and in hand.
Current assets are listed in increasing
order of liquidity.
The format for a statement of
financial position (Continued)
6. Current liabilities:
Liabilities that have to be paid within a
year of the date of the statement of
financial position.
Examples include bank overdrafts and
accounts payable.
The format for a statement of
financial position (Continued)
7. Non-current liabilities:
Liabilities that have to be paid more than
a year after the date of the statement of
financial position.
Examples include bank loans and loans
from other businesses.
The format for a statement of
financial position (Continued)
8. The format for a statement of
financial position (Continued)
