Fundamentals of Accountancy, Business and

Management 2

Name: John Fort Edwin E. Amora July 20, 2018

Strand: ABM Professor: Mr. Celestino
Concepcion

Elements of the Statement of Financial

Position

Written Report
5 Elements of Statement of Financial Position (SFP)
1. Assets are things that the business owned and are probable future
economic benefits obtained or controlled by a particular businesses a result
of past transactions or events.
Kinds of Assets:
i. Tangible Assets
Tangible Assets are those assets which have physical existence i.e. they can
be seen and touched.
Examples of tangible assets are machinery, furniture, building, etc.
ii. Intangible Assets
Intangible assets are those assets which do not have physical existence i.e.
they cannot be touched and seen. Examples of intangible assets are
goodwill, patents, trademarks, etc.
iii. Fixed Assets
Fixed Assets are those assets which are put to use for more than one
accounting period and its benefit is derived over a longer period.
For example, computer, machinery, land, etc.
iv. Current assets
Current assets are the assets which are readily convertible into cash and
generally absorbed within one accounting period.
For example, debtors exist to convert them into cash, bills receivable, etc.
Examples of Assets
 Cash, including foreign currency
 Investments( Long term)
 Pre-paid expenses
 Accounts receivables
 Inventory
 Notes Receivables
 Long term insurance
 Land
 buildings
 Equipment
 Furnishings
  Vehicles
2. Liabilities are probable future sacrifices of economic benefits arising from
present obligations of a particular entity to transfer assets or provide
services to other entities in the future as a result of past transactions or
events.
Kinds of Liabilities
i. Current Liabilities It refers to those obligations or payments which are
repayable during the current financial year. Examples of current liabilities
are Creditors, bills payable.
ii. Non-Current Liabilities It comprises of those payments which are due for
payment over a long period of time and there is no need to discharge it
immediately. For example Debentures, long term loans, etc.
Examples of Liabilities:
 Accounts payable
 Sales taxes payable
 Payroll taxes payable
 Accrued expenses
 Income Taxes Payable
 Customer Deposits
 Bonds payable.
 Long-term loans.
 Capital leases.
 Pension liabilities.
 Unearned Revenue

3. Equity or net assets, called shareholders’ equity or stockholders’ equity for

a corporation, is the residual interest in the assets of an entity that remains
after deducting liabilities.
Equity=Assets-Liabilities

4. Expenses are outflows or other using up of assets or incurrences of

liabilities during a period from delivering or producing goods, rendering
services, or other activities that constitute the entity’s ongoing major, or
central, operations.
 5. Revenues are inflows or other enhancements of assets or settlements of
liabilities from delivering or producing goods, rendering services, or other
activities that constitute the entity’s ongoing major, or central, operations.
5 Elements of Income statement

6. Investments by owners are increases in equity resulting from transfers of

resources (usually cash) to a company in exchange for ownership interest.
7. Distributions to owners are decreases in equity resulting from transfers to
owners.
8. Gains are increases in equity from peripheral, or incidental, transactions of
an entity.
9. Losses represent decreases in equity arising from peripheral, or incidental,
transactions of an entity.
10.Comprehensive income is the change in equity of a business enterprise
during a period from transactions and other events and circumstances from
non-owner sources. It includes all changes in equity during a period except
those resulting from investments by owners and distributions to owners.
Sources:
 NA. (2017). 10 Elements of a Balance Sheet. Retrieved from :
https://www.henryharvin.com/blog/60/10-elements-of-financial-statements
 NA(2018). Element of Statement if Financial Posiiton. Retrieved from:
http://highered.mheducation.com/sites/0072994029/student_view0/ebook/c
hapter1/chbody1/elements_of_financial_statements.html