FABM2

GET KNOW, REMEMBER, AND

PRACTICE!
Always remember the following:

The normal balance of asset account is

debit.

Liabilities and equity  account  have

normal balances of credit.
EXAMPLES AND STATEMENT
ILLUSTRATION ON A
An account is increased by an entry on
the side of its normal balance and SEPARATE PAGE. OF FINANCIAL
decreased by an entry on the opposite
side of its normal balance. POSITION

FOR QUESTIONSAND
CLARIFICATIONS

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fb : salve furio tarrobago (FABM2 GC)
contact no. 09461438275
email add: sfurio_070328@yahoo.com
WHAT IS SFP?
The Statement of Financial Position or
Balance Sheet reports the resources
available for the company t use, obligation
that the company is required to settle and
the equity hat belongs to the owners of
the company.
The SFP is a snapshot of the financial
position of the company.
The SFP is the main financial statement
because the bottom lines of the other
three financial statements find their way
on this financial statement.
The SFP is a report based in the
accounting equation: Assets = Liabilities +
Owner’s Equity.
TWO FORMS OF SFP
Report Form is a simple listing of assets
followed by liabilities and owners equity.
Assets and liabilities are classified as to
current and non current.
- Current assets if it can be used or
converted in cash within one year or
normal operating cycle.
- Current Liabilities are payables scheduled
to be paid within one year of the date of
SPF.
Account Form follows the general T-
account format (assets on the left and
liabilities and owner's equity on the right)
ELEMENTS OF SFP
Assets
resources that are within control of the
company and have future benefits.
a. Cash refers to money readily available to be
used in the company’s operations. The cash
account reports the balances cash in bank
(savings and checking account) as well as bills,
coins and checks on hand. However, not all
bank deposit are classified as cash. those with
the terms up to 90 days classified as cash
equivalents and more than 90 days classified as
investments. it should be disclosed in
accompanying notes to Financial Statement.
b. Receivable are assets that pertain to the
company’s right to collect or right to claim
payment.
c. Inventory refers to the cost of unsold
merchandise that the company purchased for
the purpose of reselling to its customers in the
normal course of its business.
d. Prepaid expense is an asset account that
refers to future expenses paid in advance
before the services or the goods are used.
e. Property, plant, and Equipment (PPE) are
long-term assets which are used in the
operations of the company.
f. Intangible assets are long-term assets that
have no tangible properties.
ELEMENTS OF SFP
Liabilities
obligations that the company is required
to pay.
a. Payables are obligations to make payments.
b.  Accounts payable (AP) are obligation to the
suppliers of purchased inventories.
c.  Notes Payable (NP) refers to the obligation
to pay documented in a promissory note.
d.  Accrued Expenses refers to the obligation
to pay for goods and services already used in
the operation of the business such as salaries
payable, utilities payable, rent, payable and
interest payable.
e. Unearned income refers to advance
payments made by customers while goods
and services are not yet delivered to the
customer.
f.  Long-term liabilities are obligations to pay to
be settled at some specific date that is
more than one year away from the date of the
SFP.
Owner's Equity
Equity is equal to the net assets of the
business. For sole proprietorship, the
equity account is the Owner’s Capital. It is
composed of the owners’ investments and
the accumulated net income of the
company, net of any distributions to the
owners.