Statement of Financial Position

• This is a statement that shows the assets of an organisation and its liabilities at a particular point in time. It shows the net worth of a business.
• Purpose of a Statement of Financial Position:

  • To state the value/net assets of the organisation.
  • It is a legal requirement.
  • Shows the working equity figure.
  • Informs decision making.
• Terms:

  Trade Receivables

  • Are customers who have received goods from the firm but not yet paid for them (owe you money).
• Terms:

  Trade Payables

  • Are suppliers who have sold goods to the firm (you owe money).
• Terms:

  Working Equity

  • The difference between current assets and current liabilities. Can you meet short-term debts?
• Terms:

  Equity

  • Money invested by the owner(s) into a business. This money is owed back to the owners.
• Terms:

  Drawings

  • Funds taken out by the owner for the firm for their own personal use.
• Terms:

  Non-Current Liabilities

  • Debts of the business that are not due to be repaid for more than 12 months.
• Terms:

  Current Liabilities

  • Items which the business currently owes and will have to pay back in the near future.
• Terms:

  Non-Current Assets

  • Items of value owned by the organisation for more than a year that the business depends on in order to operate (e.g. property, equipment, furniture and vehicles).
• Terms:

  Current Assets

  • Items owned by the organisation that will be used up, sold or converted into cash within a year (e.g. inventory, bank balances, cash)