The statement of financial position is created to show how many the assets and liabilities the business has
There are 5 sections to the statement of financial position:
- Non-current Assets
- Current Assets
- Current Liabilities
- Non-current liabilities
What is a Non-current Asset?
A non-current asset is an asset that we do not expect to convert into cash within a year. Non-current assets provide benefit to the business. Non-current assets can be both tangible (can be physically held) and intangible(can not be physically held)
Examples of non-current assets
To present the information there needs to be 4 columns:
- The name of the non-current asset
- The original cost of the non-current asset
- The accumulated depreciation
- The original cost minus the accumulated depreciation known as the net book value
What is a current asset?
The next section is the current asset section, this section will be assets that we expect to convert into cash within a year.
Examples of current assets:
- Trade Receivables
- Bank and cash
- Income accrued
- Prepaid expense
What is a current liability?
The next section is the current asset section, this section are any liabilities that the business will have to pay within a year.
Examples of current liabillites include:
- Trade payable
- Bank Overdraft
- Expense accrued
- Prepaid income
What is a Non-current liability?
Non current liabilities are liabilities that are owed over a long term.
- Long term Loans
To find the net assets add all assent and minus any liabilities.
What is capital?
Capital is how much money has been added or removed from the business. This consists of:
- Money added in known at the start known as opening capital (add)
- Profit/loss made in the year found in the income statement (add/minus)
- Any money added in during the year known as capital introduced (add)
- Money removed from the business known as drawing (minus)
This value should be the same as the net asset figure