Statement of

Financial Position
 - Also known as Balance Sheet.

Statement
of Financial - It presents the financial position
of an entity at a given date.
Position
 The date of this statement is always “as
at” or “as of” at the end of the period.
 Statement of Financial Position

Assets

Components Liabilities

Equity
 ASSETS

- Something that an entity owns or controls in

order to derive economic benefits from its use.

- Assets are classified as current or non-current

assets.
Classification of Assets
Are items listed on a company’s
Current Assets balance sheet that are expected to be
converted into cash within one fiscal
year.

Are long-term assets that a company

Non-Current expects to hold over one fiscal year
that cannot be readily converted to
Assets cash within a year.
 Examples of Current Assets
1. CASH - is considered the most liquid asset because it is
readily available for use. It is used as a medium of
exchange in business transactions and may be held on hand or
put in banks for safekeeping.

2. ACCOUNTS RECEIVABLES - are accounts due from

customers as a result of sale of goods or for services
rendered that are collectible within one year.
 Examples of Current Assets
3.INVENTORIES - are regarded as a current asset because
these are items held for resale because they are readily
available (either raw materials or finished goods).

4. PREPAID EXPENSES- are considered current assets

because they are expenses paid in advance to be consumed
within a year.
 Examples of Non- Current Assets

1. FIXED ASSETS- includes Property, Plant and Equipment

(Furniture, equipment, land, building, vehicles, etc.) that
are used acquired for use in operations and have an
estimated useful life of more than one year.

2. LONG- TERM INVESTMENTS - are investments made by the

owners of the business for long- term purposes like
marketable securities.

3. INTANGIBLE ASSETS are non- physical assets like

Patents, Copyright and Franchise.
 LIABILITIES

- Are obligations that a business owes to

someone which occurred from past events.

-Can be classified into current and non-current

liabilities.
Classification of Liabilities
Are those that the company expects to
Current settle within 12 months of the date on
the balance sheet.
Liabilities

Are the ones the company reckons and

Non-Current are not going anywhere.
Liabilities
 Examples of Current Liabilities

1. ACCOUNTS PAYABLE is amount due to suppliers for

the purchase of goods or services received on
account to be paid within a year.

2.NOTES PAYABLE is account due with

supporting promissory notes with short-term
mode of payments.
 Examples of Current Liabilities

3.ACCRUED EXPENSES are expenses incurred but not yet

paid, examples are Salaries Payable, Taxes Payable,
etc.

4. UNEARNED INCOME is cash collected or given in

advance from customers for future delivery of goods
or services to be performed.
 Examples of Non-Current Liabilities

1.LOANS PAYABLE is account due from third parties

which was agreed to be paid for longer terms.

2.MORTGAGE PAYABLE is account due from third

parties with associated collaterals to be paid
for longer terms.
Categories of Equity For Sole Owner’s Equity, Net of Withdrawal
Proprietorship

For Partnership Partner’s Equity, net of partner’s

Withdrawal and share of net income
(net loss).

For Corporation
Stockholders’ Equity
Steps in Preparing a Financial Position
( Single Proprietorship)

1. Start 2. Present 3. Present 4. Add the

with the the Assets the Owner’s
Heading liabilities Equity
 Steps in Preparing a Financial Position
( Single Proprietorship)

1. START WITH THE HEADING

- The heading includes the name of the business or entity

(ex. JD Gardens), name of the financial statement (ex.
Statement of Financial Position) and the reporting date/
period (ex. As of December 31, 2019).
 Steps in Preparing a Financial Position
( Single Proprietorship)

2. Assets are presented first. These are classified into

current and non- current assets.

3. Next is to present the Liabilities. These should also

be classified into current and non- current liabilities.

4. Equity/ Owner’s Equity is then added after the

liabilities to complete the accounting equation (Assets=
Liabilities + Equity).
 Forms of Statement of Financial
Position (SFP)

REPORT FORM- it is a form of SFP wherein accounts are

presented vertically, the Assets first, followed by the
Liabilities and then the Equity. The above presented
Balance Sheet is an example of a Report Form SFP.
 Forms of Statement of Financial
Position (SFP)

ACCOUNT FORM- it is a form of SFP wherein accounts are

presented horizontally, the Assets are presented on the
left side while the Liabilities and the Equity are on the
right side of the Balance Sheet. It will look like the
debit and credit balances of an account.
Activity
Directions: Prepare a properly classified Statement of Financial Position
using the Report and Account Form.

Mr. Dale Ramos, owned a plant shop named Dale’s Gardens. He hired you to prepare his
plants shop’s Statement of Financial Position for the year 2019. The following shows
the assets and liabilities of Mr. Ramos:
a. His plant shop has cash in bank account amounting to P150,000.
b. His plant shop has uncollected sales from customers amounting to P125,000.
c. The total amount of garden supplies and materials after inventory showed P80,000
on hand.
d. He already paid one year’s advertisement in advance in a local newspaper
amounting to P12,000
e. Total value of all the shop’s garden tools and equipment amounted to P150,000
f. He bought garden supplies and materials on account from his supplier
amounting to P155,000 to be paid within three months after the year- end.
g. Salaries unpaid to his three employees totalled P21,000.00.
h. Utilities amounting to P6,000.00 remained unpaid as of year- end.
i. His outstanding loan balance amounted to P45,000 will be paid within 5 years.
Activity
Directions: Prepare a properly classified Statement of Financial Position
using the Report and Account Form.

Ms. Angela Milanes, owned a flower shop named Flower of Heaven. She hired you to
prepare her shop’s Statement of Financial Position for the year 2023. The following
shows the assets and liabilities of Ms. Milanes:
a. Her flower shop has cash in bank account amounting to P500,000.
b. Her flower shop has uncollected sales from customers amounting to P345,790.
c. The total amount of the shop’s necessities and materials after inventory showed
P120,000 on hand.
d. She already paid one year’s advertisement in advance in a local newspaper
amounting to P52,000.
e. Total value of all the shop’s tools and equipment amounted to P250,000
f. She bought flower arranging supplies and materials on account from his supplier
amounting to P345, 790 to be paid within three months after the year- end.
g. Salaries unpaid to her 5 employees totalled P90,450.00.
h. Utilities amounting to P9,000.00 remained unpaid as of year- end.
i. His outstanding loan balance amounted to P85,000 will be paid within 5 years.