Statement of financial position (1)

Question 1

What is a statement of financial position?

Answer 1

A statement of financial position is a financial snapshot of the assets and liabilities of an enterprise on a particular day, usually the last day of the enterprise’s financial year

Question 2

The purpose of statement of financial position:
What does a statement of financial position show?

Answer 2

A statement of financial position shows:
1) The value of all of the enterprise’s assets and liabilities
2) The source of capital used by the enterprise to finance its operations

Question 3

Preparing a statement of financial position:
To prepare a statement of financial position correctly, what do you first need to do?

Answer 3

To prepare a statement of financial position correctly, you first need to categorise the enterprise’s:
1) Assets into fixed and current assets
2) Liabilities into current and long-term liabilities