STATEMENT OF

FINANCIAL POSITION
Prepared by: GAS B- ACCOUNTING
Learning Objectives

 Identify the elements of the Statement of Financial Position

 Describe each part of the SFP.

 Classify the elements of the SFP into current and non current items.

 Prepare the SFP using report form with proper classification of items as
current and non current.
Elements of financial position
Assets

 Theeconomic resources you control that

have resulted from past events and can
provide you with future economic benefits.
Classification of assets

 Current assets
 Non- current assets
Current Assets

 Include cash and cash equivalent which are not

restricted in use
 Expected to be realized into cash , or sold, or
consume, within the normal the normal operating
cycle of the business or 1 year whichever is longer
 Buying inventories
 Sold inventories
 Collect cash
NON CURRENT ASSETS

 Thoseassets not included as current assets

such as the long term investments,
property plant and equipment and
intangibles.
CURRENT ASSETS
1.CASH AND CASH EQUIVALENTS

Includes currencies or coins or negotiable instrument.

 CASH ON HAND – cash items in the custody of the officer-in-charge or the

owner.

 CASH IN BANK – cash deposited in the bank under current/savings account.

 CASH EQUIVALENTS – are short term highly liquid investments such as 3 month
time deposit or 3 month government treasury bill.
2.MARKETABLE SECURITIES

 These are highly traded in securities such

as stocks and bonds, purchased by the
enterprise that are to held in short term of
duration.
3.RECEIVABLES

These are collectibles from customers, clients and other persons for goods,
services or money given by the business.

 ACCOUNTS RECEIVABLE- if only an oral or an implied promise is received from

the client.

 NOTES RECEIVABLE- is evidenced by a promissory note issued by the debtor.

4.OTHER RECEIVABLES

 INTEREST RECEIVABLE- when interest is collectible on promissory notes

received from clients and customers.

 RENT RECEIVABLE- rent collectible from tenants.

 DIVIDEND RECEIVABLE- dividend collectible by a shareholder from a

corporation.
5.MERCHANDISE INVENTORY

 Is an account title used to represent the stock of goods available for sale by
the business.
6.PREPAID EXPENSES

 These represent advance payments made for benefits or services to be

received by the business in the future.
 SUPPLIES
 PREPAID INSURANCE
 PREPAID EXPENSE
7.CONTRA ASSET ACCOUNTS
These are deductions from current assets.
 ALLOWANCE FOR BAD DEBTS – represents customer’s accounts doubtful of
collection. This is deducted from AR to arrive at it’s net realizable value.
NON- CURRENT ASSETS
1.LAND
 A lot or real estate owned and used by the business on which building could be
constructed..

2.BUILDING
 Structure used to house the office, store or factory.

3.EQUIPMENT
 Typewriter, air conditioner, manufacturing equipment, vehicle.
4.FURNITURE AND FIXTURES
 Tables, chairs, and wall décor.

5.LEASEHOLD OR LEASE RIGHT

 For a fee, the lessee is given the right to use the property of a lessor over a long
period of time.

6.INVESTMENT PROPERTIES
 Are long-lived assets not used in production.
7.INTANGIBLE ASSETS

 Those assets meeting the definition of an asset but without physical

substance.

 TRADEMARKS for brand names

 PATENTS for inventions

 COPYRIGHTS for artistic/literary works

8.BIOLOGICAL ASSETS

 Living plants or animals held by business for resale or for breeding.

 TREES in plantations

 PLANTS, DAIRY CATTLE, PIGS, BUSHES, FIGS AND FRUIT TREES

9.ACCUMULATED DEPRECIATION

 Contra asset or off-set account representing expired cost of the plant,

property or equipment as a result of usage and passage of time.
LIABILITIES
LIABILITIES

 “apresent obligation arising from past

events the settlement of which is expected
to result in an outflow from the entity of
resources embodying economic benefits.” –
The Conceptual Framework for Financial
Reporting (IASB 2010)
Classification of liabilities

 Current liabilities
 Non- current liabilities
CURRENT LIABILITIES

 Arethose debts and obligations reasonably

expected to be liquidated in the normal
course of the enterprise’s operating cycle
or paid within a period of 1 year by the use
of current assets or the creation of other
current liabilities.
NON CURRENT LIABILITIES

 Arelong term liabilities or obligations

which are payable longer than one year.
CURRENT LIABILITIES
1.ACCOUNTS PAYABLE
 To trade creditors for purchase of goods or services on credit supported by the
oral or implied promise of the business.

2.NOTES PAYABLE
 Liability supported by a promissory note issued by the business to the creditor.

3.LOAN PAYABLE
 Liability to pay a bank or financing institution for amount of money borrowed by the business.
4.INTEREST PAYABLE
 To trade creditors for purchase of goods or services on credit supported by the
oral or implied promise of the business.

5.NOTES PAYABLE
 Are related to notes payable. Interest are considered as cost for borrowing
money.

6.OTHER ACCRUED EXPENSES

These accounts pertain to expenses incurred but not yet paid.
 Salaries
 Rent
 Utilities.
7. OTHER PAYABLES
 SALARIES PAYABLE – which represents obligations to pay for employees services
received from them.
 INCOME TAX PAYABLE – obligations due to the government for sales, earnings,
gains and value of property owned/sold by the business.
NON- CURRENT
LIABILITIES
1.MORTGAGE PAYABLE
 Which is an obligation secured by the real properties of business.

2.BONDS PAYABLE
 Which is a long term promise usually from five to ten or twenty years supported
by a formal contract containing the face value of the bond, the interest rate, the
interest payment date and maturity date.
OWNER’S EQUITY
OWNER’S EQUITY

 Isdefined as the proportion of the total

value of a company’s assets that can be
claimed by it’s owners.
SFP
REPORT FORM
SFP- ACCOUNT FORM
THANK YOU ☺
References

Fundamentals of Accountancy, Business and

Management 2
by: J.BETICON, J.DOMINGO, F.YABUT
21ST Century Accounting Process Basic Concepts
and Procedure 
by: Z.MANUEL
PPT PRESENTATION PRODUCED
by: Ms. Mia Quitoras