Intended Learning Outcomes (ILO) Topics Teaching Assessment Task Resources Reference

Learning
Activities

1. Identify the elements of the SFP Chapter 1: Asynchronous Online quiz Uploaded Rodel C.
and describe each of them Statement of discussion- via sample Ferrer &
Financial Position uploaded pre- Virtual drill source Zeus
2. Classify the elements of the SFP (SFP) recorded video documents Vernon B.
into current and noncurrent discussion. Presentation of personal (journal & Millan
items SFP ledger) (2019)
Self-guided Fundamen
3. Prepare the SFP of a single learning Prerecorded tals of
proprietorship video Accountan
discussion cy
4. Prepare an SFP using the report Business &
form and the account form with Text books Manageme
proper classification of items as nt, Part 2.
Self-guided Chapter 1,
current and noncurrent
modules page 1-21
Module 1: Statement of Financial Position

Introduction

The purpose of accounting is to accumulate and report on financial information

about the performance, financial position, and cash flows of a business. This information
is then used to reach decisions about how to manage the business, or invest in it, or
lend money to it. This information is accumulated in accounting records with accounting
transactions, which are recorded either through such standardized business
transactions as customer invoicing or supplier invoices, or through more specialized
transactions, known as journal entries.

Once this financial information has been stored in the accounting records, it is
usually compiled into financial statements, which include the following documents:
Statement of Financial Position, Statement of Comprehensive Income, Statement of
Cash flows, Statement of Changes in Equity and Notes to the Financial Statements.

In this chapter we will be focusing on the Statement of Financial Position (SFP).

At the end of the topic, learners should be able to:

1. Identify the elements of the SFP and describe each of them
2. Classify the elements of the SFP into current and noncurrent items
3. Prepare the SFP of a single proprietorship
4. Prepare an SFP using the report form and the account form with proper classification
of items as current and noncurrent
5. Reflect on the importance of preparing the SFP

Pre-test

The following items are taken from the records of X Merchandising. Identify or classify the
items as to whether they belong to the Assets, Liabilities, Owner’s Equity, or Expense of the
business.

Accounts Element
Merchandise inventory
Accounts receivable
Worthless receivable
Prepaid rent
Obsolete merchandise
Rent expense
Notes receivable
Accrued interest receivable
Unused supplies
Used supplies
Land
Store building
 Accounts Element
Owner's equity
Furniture & fixture
Sales( 80% cash)
Depreciation expense
Cash
Accounts payable
Withholding tax payable
Notes payable (20% current)
Accrued interest payable
Interest income
Interest expense
Owner's drawing
Rent expense

How do you rate yourself in the pre-test?

How many accounts were you able to identify correctly? Congratulation! Job well
done.
Relax and make sure you are comfortably seated as you proceed through this module.

STATEMENT OF FINANCIAL POSITION

Also known as the balance sheet. This statement includes the amounts of the
company’s total asset, liabilities, and owner’s equity which in totality provides the condition of
the company on a specific date. (Haddock, Price & Farina, 2012)

PERMANENT ACCOUNT
As the name suggest, these accounts are permanent in a sense that their
balance remain intact from one accounting period to another. Example of permanent
account includes Cash, Account receivable, Account payable, Loans payable and Capital
among others. Or all Asset, Liability and Equity account are considered permanent account.

Now, let see an example of the Statement of Financial Position

 HWY COMPANY
STATEMENT OF FINANCIAL POSITION
AS OF DECEMBER 31, 2020

ASSETS
CURRENT ASSETS
Cash 100,000.00
Accounts Receivable 500,000.00
Less: Allowance for doubtful accounts 50,000.00 450,000.00
Accrued Income 300,000.00
Inventory 200,000.00
Prepaid Expenses 50,000.00
Total Current Assets 1,100,000.00

Long-term Investment 1,250,000.00

Intangible Assets 500,000.00
Property, Plant and Equipment
Cost 1,000,000.00
Less: Accumulated Depreciation 300,000.00 700,000.00
Total Noncurrent Assets 1,450,000.00
TOTAL ASSETS 3,550,000.00

LIABILITIES AND OWNER'S EQUITY

Current Liabilities
Accounts Payable 250,000.00
Accrued Expenses 100,000.00
Unearned Income 80,000.00
Notes Payable 150,000.00
Total Current Liabilities 1,580,000.00

Noncurrent Liabilities
Mortgage Payable 500,000.00
Loans Payable 1,000,000.00
Total Noncurrent Liabilities 1,500,000.00
Total Liabilities 3,080,000.00

Owner's Equity 470,000.00

TOTAL LIABILITIES AND OWNER'S EQUITY 3,550,000.00

Moving forward: Statement of Financial Position can be presented in two (2) ways
 a. Report form
b. Account form

Report form Account form

Header
Header
Asset
Asset Liabilities
Liabilities
Equity
Equity

As seen in the given figure, both form consists the same content they only differ in
presentation. It’s like Portrait and Landscape view.

PRACTICE:
Given the following account balances lifted from XXX Company as of December 31,
2019 prepare the Statement of Financial Position.

Account Titles Amount

Cash 5,000.00
Accounts Receivable 2,600.00
Allowance for doubtful accounts 2,300.00
Inventory 113,000.00
Prepaid Expenses 17,000.00
Long-term Investment 130,000.00
Property, Plant and Equipment 25,000.00
Accounts Payable 50,000.00
Accrued Expenses 23,300.00
Notes Payable 32,000.00
Mortgage Payable 75,000.00
Loans Payable 100,000.00

Post-test
The following items are taken from the records of X Merchandising. Identify or classify the
items as to whether they belong to the Assets, Liabilities, Owner’s Equity, or Expense of the
business.

Accounts Element
Worthless receivable
Withholding tax payable
Used supplies
Unused supplies
Store building
Sales( 80% cash)
Rent expense
Rent expense
Prepaid rent
Owner's equity
Owner's drawing
Obsolete merchandise
Notes receivable
Notes payable (20% current)
Merchandise inventory
Land
Interest income
Interest expense
Furniture & fixture
Depreciation expense
Cash
Accrued interest receivable
Accrued interest payable
Accounts receivable
Accounts payable
EXERCISES:

Easy:

1. Juan Inc. had current assets amounting to 100,000. Noncurrent assets for the year
totalled 76,000. How much is the company’s total assets?

2. Happy selling company’s total liabilities amounted 10,000. Total equity had an ending
balance of 20,000. How much is total assets?

Medium

1. Happy selling’s had the following accounts at year end: Cash-250,000, Accounts
payable- 70,000, Prepaid expense- 15,000. Compute for the company’s current
assets

2. H inc. Accounts receivable amounted to 500,000, prepaid expense and unearned

income totalled 30,000 and 10,000 respectively. Cash balance amounted to 100,000
while accounts payable and inventory totalled 20,000 and 10,000 respectively. How
much is the company’s current assets? Current liabilities?

Difficult

1. Prepare a Statement of Financial Position using the following accounts (one in report
form and one in account form):
Cash- 5,000
Loans payable- 77,500
Accounts Receivable- 2,600
Supplies- 2,300
Equipment- 17,000
Owner’s equity- 40,000
Accounts payable- 22,400
Building- 113,000