Purposes for the Statement of Financial Position

Question 1

What is the purpose of the Statement of Financial Position?

Answer 1

Achieved
To show the Revenue, Expenses and Net Profit for the period for the (insert name of the Business here).
Merit
This allows (insert the user name here) to make decisions about (make up a decision relating to Revenue, Expenses or Profit related to the question)

Question 2

What are the components of the statement of financial position?

Answer 2

Components

Income – Sales or Fees
Other Income
Cost of Goods Sold
Expenses 
Distribution
Administrative
Finance Costs
Net Profit

Question 3

What are the limitations of the statement of financial position?

Answer 3

Does not include non-financial information. E.g. quality of goods or services provided, quality of staff, foot traffic.

Some expenses are based on estimates eg. depreciation, doubtful debts which maybe incorrect and so final profit is inaccurate.