GRADE

12

Technical Vocational
Livelihood
ACCOUNTING 2
Work Sheet (Q1, Wk1)
Statement of Financial Position
(SFP)

Most
Essential
Learning
Competency
:

1.
Identify
the
elements
of the
SFP and
describe
each of
them.
2.
Classify the elements of the SFP into current and non
current items.
 3. Prepare the SFP of a single proprietorship. 4. Prepare
an SFP using the report form and the account form with
proper classification of items as current and non-
current.

Activities
Activity 1
Title of Activity: Preparation of the Statement of Financial Position

Objective:
1. Identify the elements of the SFP for a single/sole proprietorship. 2.
Reflect on the difference and separation of current and non- current
items in SFP.
3. Prepare the SFP in the report form and the account form. 4.
Know the importance of preparing the SFP.

Procedure:
A. Prepare a Statement of Financial Position (SFP) for Happy Tour &
Travel in a yellow pad, using the Report Form and the Account Form.
Follow the correct format in preparing the SFP for December 2019. Cash -
P 57,000
Gomez, Capital - 825,000
Furniture & Fixture - 45,000
Accounts Receivable - 18,000
Loans Payable - 100,000
Vehicle - 750,000
Equipment - 55,000
B. Analysis of business transaction and preparation of SFP.
In order to prepare the SFP of Mr. Juan dela Cruz for his sari-sari store for
the month of November 2019, identify the following assets and liabilities of
Mr. dela Cruz. Journalize first and prepare the SFP in Report and Account
Forms.
1. Deposited cash in a bank account amounting to P50,000. 2.
 Uncollected sales from customers amounting to P75,000. 3. The total
amount of merchandise left inside the store is P30,000. 4. Paid one
year’s rent in advance amounting to P12,000. 5. The value of all the
company’s furniture amounted to P100,000. 6. Bought merchandise from
supplier amounting to P25,000, and the
supplier agreed that payment can be made 2 months after year-end.
7. SSS, Philhealth and Pag-Ibig payables for an employee totaled to
P5,000.
8. Outstanding liabilities to utility companies amounting to P3,000. 9.
Bank loan amounting to P50,000 to be paid in 3 years.
Critical Thinking Questions: Write your answers in a yellow pad.
1. How did you distinguish the difference between the current and non-current items
while preparing the SFP?
__________________________________________________________________
_
__________________________________________________________________
_

2. What is the difference between the SFP’s Report Form and Account Form?
___________________________________________________________________
___________________________________________________________________

3. What are the reasons that the total amount of assets is not equal or balance with
liabilities and owner’s equity?
___________________________________________________________________
___________________________________________________________________

Remember
∙ The Statement of the Financial Position (SF) basically known as the Balance
Sheet. It consists of Assets, Liabilities and Owner’s Equity. Assets is of equal
value to the total amount of Liabilities and Owner’s Equity, or each total amount
should be balance.

∙ Permanent accounts’ balances remain intact from one accounting period to

another. The accounts are retained permanently in the SFP until their balances
become zero. Examples of permanent account include cash, accounts receivable,
accounts payable, loans payable, capital, etc.

∙ Contra assets are accounts under the assets portion of the SFP but are reductions
to the company’s assets. This include:
o Allowance for Doubtful Accounts which is contra asset to Accounts
Receivable. It means that not all receivables could be paid by delinquent
customers.
o Accumulated Depreciation is a contra asset to the company’s PPE
(property, plant & equipment). It represents the total amount of depreciation
booked against the fixed assets of the company.
∙ Assets and Liabilities accounts have current and non-current elements or
accounts:
o Current Assets means that all accounts are convertible to cash or can be
 liquidated within an accounting period or within one year. These assets are
arranged according to liquidity. Also known as short term assets.
Examples are cash, notes receivable, accounts receivable, inventories,
unused supplies, prepaid expenses, etc.
o Non-current Assets are more or less permanent in nature, being acquired
for business and are not intended for cash conversion. These cannot be
realized (collected, sold, used up) one year after year-end date. It would
take longer time to convert these to cash or to liquidate. Examples are land,
building, machine, furniture & fixture, office equipment, tools, vehicles or
delivery trucks. Intangible assets also fall under this category.
o Current Liabilities are payable within one year or accounting period. These
are short-term payables like notes payable, accounts payable, accrued
expenses, unearned income, etc.
o Non-current Liabilities are payable beyond one year (> a year). These
long-term payables are bank loan, bonds payable, mortgage payable, etc.

∙ A Report Form in SFP shows Asset accounts first followed by Liabilities and
Owner’s Equity accounts. The total amount of assets is showed after which is
balance with Liabilities and Owner’s Equity Accounts. This is in a vertical
presentation.

∙ Account Form of SFP shows Assets on the left side having its total amount. The
Liabilities and Owner’s Equity is positioned on the left side which total amount is
balance to Assets.
o These two formats of SFP presentation that shows the same amount of
Assets, Liabilities and Owner’s Equity.
o Assets should always be equal to Liabilities and Owner’s Equity. ∙ The
difference of the SFP between a service company and a merchandising company
lies on the inventory account –
o Service Co. – supplies inventory under the current assets
o Merchandising Co. – supplies inventory under the current assets but has
another inventory account under its current assets – Mdse. Inventory,
Endin

Checking your Understanding

Critical Thinking Questions: write your answers in a yellow pad paper. 1.
Why is it that intangible assets are included in non-current assets?
2. How come that the total amount of assets is not equal or balance with liabilities
and owner’s equity? What could be the possible reasons?

3. How important for a company to possess long-term assets?

4. If a sari-sari store store’s total liabilities amounted to P10,000 and the total equity
had an ending balance of P20,000, how much is the total assets. Explain your
answer

5. If the liabilities of a company is more than the assets and owner’s equity, what do
you think is the financial standing of a company?
 Evaluation
Directions: Write the letter of the correct answer in a separate paper.

A. Matching Type:
1. Accounts that are presented under A. Report Form
the asset portion of the SFP but are B. Balance Sheet reductions
to the company’s assets C. Contra Assets 2. These accounts’
balances remain D. Account Form
intact from one accounting period E. Permanent Account to another F.
Owner’s Equity 3. A form of the SFP that shows asset G. Non-current
Liabilities accounts first and then Liabilities and
owner’s equity accounts after.
4. It is also known as the Statement of
Financial Position
5. This account can be liquidated
(collected, sold, used up) one year
after year-end date.
B. Compute and write the correct answer.

1. Travel & Tours company had current assets amounting to P100,000. Non-current
assets for the year totaled to P76,000. How much is the company’s total assets? A.
P170,000 B. P175,000 C. P176,000 D. P179,000

2. The said company had the following accounts at year end: Cash – 250,000,
Accounts Payable – 70,000, Prepaid Expense – 15,000. How much is the
company’s current assets?
A. P265,000 B. P270,000 C. P300,000 D. P305,000

3. Juan dela Cruz sari-sari store’s accounts receivable amounted to P500,000.

Prepaid expense and unearned income totaled to P30,000 and P10,000
respectively. Cash balance amounted to P100,000 while accounts payable and
inventory totaled to P20,000 and P10,000 respectively. How much is the store’s
current assets? Current liabilities?
A. P540,000 & P20,000 C. P550,000 & P25,000 B. P640,000 &
P30,000 D. P650,000 & P35,000

4. Company’s total Liabilities and equity amounted to P285,000. Total non-current

assets ended at P85,000. Cash totaled P50,000, inventory amounted to P100,000.
Assuming the company had no other assets, how much is accounts receivable? A.
P65,000 B. P60,000 C. P55,000 D. P50,000

5. Total assets amounted to P575,000, total equity amounted to P250,000, accounts

payable is P50,000 while unearned income totaled to P85,000. Assuming there are
no other current liabilities, how much is the company’s non-current liabilities. A.
P188,000 B. P190,000 C. P195,000 D. P199,000
 Answer Card
B 5.
D 4.
B 3.
A 2.
C 1.
M.C. B.
G 5.
B 4.
A 3.
E 2.
C 1.
M.T. A.
Evaluation

References
Books:
Fundamentals of Accountancy, Business & Management 2 (Teachers Guide)
Zenaida Vera Cruz-Manuel, 21st Century Accounting Process (22nd Ed.), Raintree
Trading & Publishing, Inc.
Nelson S. Abeleda, Simplified Accounting for Single Proprietorship (2009), Nelson
Publications
Internet:

Written by:
EVELYN S. PLAZA, San Juan City Academic Senior High School

For questions or comments, write or call:

Department of Education
Schools Division Office – San Juan City
Pinaglabanan St., San Juan City, Philippines 1500
Telefax: (632) 8451-2699; (632) 8251-2383
Email Address: depedsanjuanrecords@gmail.com