Statement of

Financial
Position (SFP)
Prepared by: Mr. James C. Dela Cruz
 Statement of Financial
Position
• Also known as the balance sheet.

• This statement includes the amounts of the

company’s total assets, liabilities, and owner’s
equity which in totality provides the condition of the
company on a specific date. (Haddock, Price, &
Farina, 2012)
 Statement of Financial
Position

• Permanent Accounts

• Contra Assets
 Permanent Accounts
• These accounts are permanent in a sense that their
balances remain intact from one accounting period
to another. (Haddock, Price, & Farina, 2012)
• Examples: Cash, Accounts Receivable, Accounts
Payable, Loans Payable and Capital among others.
• The accounts are retained permanently in the SFP
until their balances become zero.
 Contra Assets
• Those accounts that are presented under the
assets portion of the SFP but are reductions to the
company’s assets.
• Allowance for Doubtful Accounts and Accumulated
Depreciation.
• Allowance for Doubtful Accounts is a contra asset to
Accounts Receivable and represents the estimated
amount that the company may not be able to
collect from delinquent customers.
 Contra Assets
• Accumulated Depreciation is a contra asset to the
company’s Property, Plant and Equipment. This
account represents the total amount of
depreciation booked against the fixed assets of the
company.
 Form of the SFP

• Report Form

• Account Form
 Report Form

• It shows asset accounts first and then

liabilities and owner’s equity accounts
after. (Haddock, Price, & Farina, 2012)
• The balance sheet shown earlier is in
report form.
 Account Form
• A form of the SFP that shows assets on the left side and
liabilities and owner’s equity on the right side just like the
debit and credit balances of an account. (Haddock, Price,
& Farina, 2012)
• Emphasize that the two are only formats and will yield
the same amount of total assets, liabilities and equity.
• Emphasize that assets should always be equal to
liabilities and equity
 Group Accounts

• Current Assets
• Non-current Assets
• Current Liabilities
• Non-current Liabilities
 Current Assets
• Assets that can be realized (collected, sold, used up) one
year after year-end date.
• Example:
• Cash
• Accounts Receivable
• Merchandise Inventory
• Prepaid Expense
 Non-current Assets
• Assets that cannot be realized (collected, sold, used up)
one year after year-end date.
• Example:
• Property, Plant and Equipment
• Long Term Investments
• Intangible Assets
 Current Liabilities
• Liabilities that fall due (paid, recognized as revenue)
within one year after year-end date.
• Example:
• Notes Payable
• Accounts Payable
• Accrued Expenses
• Unearned Income
 Non-current Liabilities
• Liabilities that do not fall due (paid, recognized as
revenue) within one year after year-end date.
• Example:
• Loans Payable
• Mortgage Payable
 Note
• Current Assets are arranged based on which asset can
be realized first (liquidity).
• Current assets and current liabilities are also called short
term assets and shot term liabilities.
• Noncurrent assets and noncurrent liabilities are also
called long term assets and long term liabilities.
Parts of the SFP
 HEADING

CURRENT ASSETS

NON-CURRENT ASSETS
 CURRENT LIABILITIES

NON-CURRENT LIABILITIES

EQUITY
 HEADING
CURRENT
LIABILITIES
CURRENT ASSETS

NON-CURRENT LIABILITIES

NON-CURRENT ASSETS
EQUITY
Teacher
Thank you
Resources
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Listening!!!