Components of a statement of financial position:

• What is another name for the statement of financial position?

  Balance sheet
• Equity represents the owner's stake in the business.


  True
• Steps in analyzing a sample statement of financial position:

  1️⃣ Review the components

  2️⃣ Understand the equation

  3️⃣ Calculate equity if necessary

  4️⃣ Assess financial health
• Equity represents the business's net worth
• In the basic accounting equation, equity represents the owners' stake in the business
• What does equity represent in a business?

  Net worth
• The basic accounting equation states that assets equal liabilities plus equity.

  True
• Equity represents the owners' stake in the business.


  True
• Non-current assets are held for long-term use to provide operational benefits.


  True
• Liabilities represent what a business owes to external parties.

  True
• Current liabilities are obligations that must be paid within one year
• Share capital represents the amount invested by shareholders in exchange for shares.


  True
• Match the component of equity with its definition:

  Share Capital ↔️ Amount invested by shareholders

  Retained Earnings ↔️ Profits kept and reinvested
• The statement of financial position adheres to the basic accounting equation.


  True
• The basic accounting equation states that a business's assets are equal to the sum of its liabilities and equity.
• Assets are what a business owns and can use to generate future economic benefits.
• Match the asset category with its example:

  Current Assets ↔️ Cash

  Non-Current Assets ↔️ Property
• Match the liability type with its example:

  Current Liabilities ↔️ Accounts payable

  Non-Current Liabilities ↔️ Long-term loans
• Match the liability type with its definition:

  Current Liabilities ↔️ Obligations paid within one year

  Non-Current Liabilities ↔️ Obligations due beyond one year
• Match the equity component with its definition:

  Share Capital ↔️ Amount invested by shareholders

  Retained Earnings ↔️ Profits kept by the company
• Steps for preparing a statement of financial position

  1️⃣ Identify assets

  2️⃣ Identify liabilities

  3️⃣ Calculate equity

  4️⃣ Ensure the accounting equation balances
• The basic accounting equation is $Assets =$$Liabilities - Equity$.


  False
• The statement of financial position shows a business's financial position over a period of time.

  False
• Equity represents the business's net worth, which is the difference between its assets and liabilities.


  True
• The basic accounting equation is $Liabilities =$$Assets +$$Equity$.


  False
• Liabilities are obligations a business owes to external parties.

  True
• Non-current assets cannot be converted to cash within one year.


  True
• Non-current assets are held for short-term use and quick conversion to cash.

  False
• Current liabilities must be paid within one year.


  True
• What is the time frame for current liabilities?

  Within one year
• What are three examples of non-current liabilities?

  Long-term loans, bonds payable, deferred tax liabilities
• What is share capital in equity?

  Money invested by shareholders
• What is the importance of liabilities in the accounting equation?

  Represents financial obligations
• What do liabilities represent in the statement of financial position?

  What the business owes
• What does the relationship between assets, liabilities, and equity ensure in the balance sheet?

  It always balances
• What does the statement of financial position show at a specific point in time?

  Assets, liabilities, and equity
• What do liabilities represent in the basic accounting equation?

  Obligations to external parties
• What is the key difference between current and non-current assets?

  Liquidity
• Liabilities represent what the business owes to external parties.


  True
• The balance sheet provides a snapshot of the business's financial position