STATEMENT OF FINANCIAL POSITION
a financial report which list in detail the Assets,
Liabilities of the business and show the
residual interest of the owner as of specific
date.
ASSETS
This includeby anything owned or possessed
CURRENT ASSETS
Current Assets – include cash and cash which are not
restricted in use, as well as other assets readily
convertible into cash, or to be sold or consumed within
the normal operating cycle of the business or one year.
CURRENT ASSETS
1.
•
•
Cash– currencies or coins or negotiable instruments such as
bank checks or postal money order used as a medium of
exchanges. Two account titles could be used:
Cash on Hand – items in the custody of the cashier, or the
owner
Cash in Bank – for deposit in the bank under savings or
current account.
CURRENT ASSETS
2.
Cash Equivalents – are short term, highly liquid
investments such as three month time deposit, or a
three month treasury bill.
3.
Investment in Trading Securities – these are highly
traded in securities such as the stocks and bonds
purchased by the enterprise that are to held for a short
term duration.
CURRENT ASSETS
4. Trade and Other Receivables – are collectibles from
customers, clients, and other persons for the goods , services
or money given by the business.
•
Accounts Receivable – amount to be collected
in the future from customers or clients
•
Notes Receivable – amount to be collected
in the future from customers supported by a
promissory note.
CURRENT ASSETS
Cont… Trade and Other Receivables
•
Interest Receivable – the amount of interest collectible from
Notes Receivable.
•
Advances to Employees – amount of cash advance given
to employee
•
Accrued Income – income earned but not yet collected as of
end accounting period.
CURRENT ASSET
Cont…Trade and Other Receivables
•
Rent Receivable – amount to collected from
tenants for space rented
•
Dividend Receivable – expected divided to received from
investment in stocks.
•
Other receivables
CURRENT ASSETS
5.
Prepaid Expenses – these represent advance payments for
benefits or service to be received by the business in the future.
Examples are:
•
Supplies/Prepaid Supplies/Unused Supplies
•
Prepaid Insurance
•
Prepaid Rent
NON-CURRENT ASSETS
Non-current assets are those assets not considered as current
assets. These include Property, Plant and Equipment (PPE)
PPE or Fixed assets are assets needed to support the operation
of the business over a long period of time and they are not
intended for sale.
NON-CURRENT ASSETS
1.
Land – a lot or real estate owned and used by the business
on which a building could be constructed.
2.
Building – structure used to house the officer, store or
factory.
3. Office Equipment – equipments being use in the officer. Ex.
typewriters, computers, calculators, filing cabinets, electric
fans, air-conditioners…
NON-CURRENT ASSETS
4.
Store Equipment – equipments being use in the store operation.
Ex. computers, cash registers, air-conditioning units, calculators,
electric fans…
5.
Delivery Equipment/ Transport Equipment/ Transport Vehicle transport vehicle used by the business in their operation. Ex.
trucks, cars, vans..
6. Office Furniture – are furniture in the office. Ex. Tables, chairs,
curtains, lighting fixtures, wall decors..
NON-CURRENT ASSETS
7.
Store Furniture – are furniture in the store. Ex. shelves,
table, chairs, lighting fixtures, wall decors…
8.
Accumulated Depreciation – contra-asset account or offset account representing expired cost of the plant, property
or equipment as a result of usage and passage of time.
LIABILITIES
Claims against assets – that is- existing debts and
obligations
CURRENT LIABILITIES – are those debts and obligations
reasonably expected to be liquidated in the normal
course of the enterprise operating cycle or paid within a
period of one year by the use of current assets or the
creation of other current liabilities.
CURRENT LIABILITIES
1.
•
•
Trade and Other Payables
Accounts Payable – to creditors for purchase of
goods and services on credit.
Notes Payable – a liability supported by a
promissory note issued by the business to the
creditors.
CURRENT LIABILITIES
• Loans Payable – is a liability to pay a bank or a
financing institution for amount of money
by the business.
•
Utilities Payable – is a liability to pay utility
companies like PLDT, MERALCO, and MWSS
•
Interest Payable – interest due on promissory
notes issued.
•
Salaries Payable – unpaid salaries as of end of
accountingCURRENT
period.
LIABILITIES
•
Unearned Income – revenue collected but not
yet earned. Meaning, the services has not yet
been rendered or the goods has not been
delivered yet.
•
Accrued Expenses – expense incurred but not
paid as of end of accounting period.
NON-CURRENT LIABILITIES
Long term liabilities or obligations which are payable
longer than one year
1.
Notes Payable – long terms debts and obligations
to creditors supported by a supported by a promissory note.
2. Bonds Payable – long term obligation which are
evidenced by bonds issued to investors.
NON-CURRENT LIABLITIES
3. Mortgage Payable – are long term obligation which are
supported by collateral on real property.
OWNER’S EQUITY
Ownership claim on total assets. It is often
referred to as the “Residual Equity”
Owner’s Equity = Assets-Liabilities
Increases in Owner’s Equity
(1)
Investment by the Owner – these are the assets that the owner
put into the business
---The account title use in recording investment is
“Owner, Capital”
OWNER’S EQUITY
(2) Revenues – are the gross increase in owner’s equity
resulting from business activities entered into for the
purpose of earning income. Generally, revenue from
selling merchandise, performing services, renting
property and lending money. Common source of revenue
are sales, fees, services, commissions, interest, dividends,
royalties and rent.
OWNER’S EQUITY
Decreases in Owner’s Equity
(1) Drawings – an owner may withdrew cash or other
assets for personal use.
(2) Expenses – are the cost of assets consumed or services
used in the process of earning revenues