Statement of Financial Position

STATEMENT OF
FINANCIAL POSITION
FUNDAMENTALS OF ACCOUNTANCY, BUSINESS AND MANAGEMENT 2
DIRECTION: Arrange the letter based on the description
given.
1. An account whose balance

doesn't reset to zero at the NNETMPRE
end of the accounting A
period. Instead, the balance PERMANENT
is cumulative and carries
over from one accounting
period to the next.
2. An account that
is closed at the end PORRATYEM
of every accounting
period and starts a TEMPORARY
new period with a
zero balance.
3. A type of asset RTACNO
account where the SSAET
account balance
may either be a CONTRA
negative or zero ASSETS
balance.
Elements of Statement of Financial Position and
Steps in Preparation
1. Prepare the Statement Heading

 The statement heading includes the name of the
company, name of the statement, and the date covered.
The date of the statement of financial position is “as at”
or “as of” the end of the period (e.g. As of December 31,
2020). The use of “as of” in the SFP means that the
amounts are cumulative from the beginning of the life
of the company since these amounts are permanent.
2. Prepare the Asset Section
 Assets are categorized as current or
non-current. Current assets and non-
current assets are arranged by
liquidity. Liquidity, for this purpose,
means the ease of converting such
assets into cash.
Current Assets – Assets that can be
realized (collected, sold, used up) one
year after year-end date.
Examples include Cash, Accounts

Receivable, Merchandise Inventory,
Prepaid Expense, etc.
Noncurrent Assets – Assets that cannot
be realized (collected, sold, used up) one
year after yearend date.
Examples include Property, Plant and

Equipment (equipment, furniture,
building, land), long term investments,
Intangible Assets etc.
3. Prepare the Liabilities Section
 Liabilities are categorized as current
or non-current. Finally, current and
non-current liabilities are arranged
by liquidity. Liquidity, for this
purpose, means the ease of
converting such liabilities into cash.
Current Liabilities – Liabilities
that fall due (paid, recognized as
revenue) within one year after
yearend date.
Examples include Notes Payable,
Accounts Payable, Accrued Expenses
(example: Utilities Payable),
Unearned Income, etc.
Noncurrent Liabilities – Liabilities that
do not fall due (paid, recognized as
revenue) within one year after year-end
date.
Examples include Loans Payable, Mortgage
Payable, etc. Note: Noncurrent assets and
noncurrent liabilities are also called long
term assets and long term liabilities
respectively.
4. Prepare the Owner’s Equity
Section
 This section is basically lifted from
the ending balances of accounts in
the statement of changes in equity.
5. Ensure that the Accounting
Equation is Balanced
 Total assets will have to equate to
total liabilities and equities.
Furthermore, the statement is
footed and tested for mathematical
accuracy.
Direction: Classify the following accounts
whether they are assets, liability, or equity
accounts. For asset and liability accounts, classify
whether they are current or non-current.
Rubrics:
1. Accuracy of analysis 10 pts
2. Correct classifying of 10 pts
accounts
3. Clarity and coherence of 10 pts
explanation
Total 30 pts
ACCOUNTS ELEMENT CLASSIFICATION
Ex. Accounts
Liability Current
Payable
Understanding the financial health of your
business is an essential tool for making
financially sound decisions to sustain and
grow your company, and securing capital from
investors and lenders. The statement of
financial position also plays an important role
when preparing your company's annual
accounts.
Direction: Read and carefully examine the
statements and choose the best answer.
1. Which of the following accounts is a
current asset?
A. Bond Payable
B. Notes payables
C. Property, Plant and
Equipment
D. Accounts receivables
2. Which of the following transactions
would increase cash as well as non-
current liabilities?
A. Long-term bank loan
B. Purchasing equipment on
credit
C. Payment to suppliers
D. Payment from customers
3. Which of the following accounts
is a current liability?
A. Trade receivables
B. Retained Earnings
C. Trade Payables
D. Machineries
4. A Statement of Financial Position
A. Shows the changes of the owners
interest
B. Reports the assets and claims of an
enterprise at a specified
moment in time
C. Presents revenue and expenses of an
enterprise
D. Reports the inflow and outflow of cash
5. A statement of financial position can be best
described as a _________.
A. Listing of money received and paid
during the past year
B. Summary of what happened last year
C. Summary of all assets, expenses,
liabilities, and revenues
D. Summary of the position of an
organization

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STATEMENT OF

1. An account whose balance

1. Prepare the Statement Heading

Examples include Cash, Accounts

Examples include Property, Plant and

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