Statement of Financial

Position
Learner's Module in Fundamentals of
Accountancy and Business Management
2
Quarter 1 ● Module 1

DENVER G. ALIWANA
Developer

Department of Education • Cordillera Administrative Region

Clarence Trixie Delara
2023-03-09 02:27:34
--------------------------------------------
Jshshsh
NAME: GRADE AND SECTION:
TEACHER: SCORE:
 Republic of the Philippines
DEPARTMENT OF EDUCATION
Cordillera Administrative Region
SCHOOLS DIVISION OF BAGUIO CITY
Military Cut-off, Baguio City

Published by:
DepEd Schools Division of Baguio City
Curriculum Implementation Division

COPYRIGHT NOTICE
2020

Section 9 of Presidential Decree No. 49 provides:

“No copyright shall subsist in any work of the Government of the Philippines.
However, prior approval of the government agency of office wherein the work is
created shall be necessary for exploitation of such work for profit.”

This material has been developed for the implementation of K-12 Curriculum
through the DepEd Schools Division of Baguio City – Curriculum Implementation
Division (CID). It can be reproduced for educational purposes and the source must
be acknowledged. Derivatives of the work including creating an edited version, an
enhancement or a supplementary work are permitted provided all original work is
acknowledged and the copyright is attributed. No work may be derived from this
material for commercial purposes and profit.

ii
 PREFACE

This module is a project of the DepEd Schools Division of Baguio City through
the Curriculum Implementation Division (CID) which is in response to the
implementation of the K to 12 Curriculum.

This Learning Material is a property of the Department of Education, Schools

Division of Baguio City. It aims to improve students’ academic performance
specifically in accounting, business and management.

Date of Development : June 2020

Resource Location : DepEd Schools Division of Baguio City
Learning Area : ABM
Grade Level 12
Learning Resource Type : Module
Language : English
Quarter/Week : Q1/W1
Learning Competency/Code : prepare an SFP using the report form and the
account form with proper classification of items as
current and noncurrent (ABM_FABM12-Ia-b-4)

iii
 ACKNOWLEDGEMENT

The developer would like to express his deep and sincere gratitude to those
who contributed significantly in the development of this learning material.
Our assistant school head in the Senior High department, Mr. Rey D.
Gapasin, for the motivation. Our school’s supervisory office led by our school
principal, Madam Brenda M. Cariño. Thank you all for your moral and technical
support in the crafting of this learning module. To my friend, colleague and mentor
Mr. Sydney Shan M. Cariño for editing this manuscript as well as for the invaluable
guidance throughout the preparation of this humble work. To my colleagues in the
ABM group of Baguio City National High School for sharing your knowledge and
expertise as I developed this learning resource. Lastly, to the office of DepEd
Division of Baguio City for giving us the privilege to deliver better services to the
Filipino learners.

Development Team
Author/s: Denver G. Aliwana
Illustrator: Estrella Ramos (Cover Art) and Marilyn Degay-Bugatti (Label Icons)

School Learning Resources Management Committee

Brenda M. Cariño School Principal
Rey D. Gapasin Subject/ Learning Area Specialist
Sherwin Fernando School LR Coordinator

Quality Assurance Team

Francisco C. Copsiyan EPS – Mathematics
Lourdes B. Lomas-e PSDS – BCNHS District

Learning Resource Management Section Staff

Loida C. Mangangey EPS – LRMDS
Victor A. Fernandez Education Program Specialist II - LRMDS
Christopher David G. Oliva Project Development Officer II – LRMDS
Priscilla A. Dis-iw Librarian II
Lily B. Mabalot Librarian I

CONSULTANTS

JULIET C. SANNAD, EdD

Chief Education Supervisor – CID

SORAYA T. FACULO, PhD

Asst. Schools Division Superintendent

MARIE CAROLYN B. VERANO, CESO V

Schools Division Superintendent
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 TABLE OF CONTENTS

COPYRIGHT NOTICE..................................................................................................ii
PREFACE.....................................................................................................................iii
ACKNOWLEDGEMENT...............................................................................................iv
TABLE OF CONTENTS................................................................................................v
What I Need to Know....................................................................................................1
What I Know..................................................................................................................2
Lesson: Statement of Financial Position .....................................................................4
What’s In ..................................................................................................................................4
What’s New .............................................................................................................................5
Activity : My Personal Financial Position ..............................................................5
What Is It ......................................................................................................................6
What’s More ..........................................................................................................................13
Activity 1: Classifying Accounts ..........................................................................13
Assessment 1.......................................................................................................14
Activity 2: Presentation of Contra-Asset Accounts..............................................14
Assessment 2.......................................................................................................14
What I Have Learned .................................................................................................15
Activity: Filling in those blanks! ...........................................................................15
What I Can Do............................................................................................................16
Activity 1: Preparing SFP in Report Form............................................................16
Activity 2: Preparing SFP in Account Form..........................................................16
Post-Assessment........................................................................................................18
Additional Activity........................................................................................................19
Activity: SALN vs. SFP.........................................................................................19
ANSWER KEY............................................................................................................20
REFERENCES............................................................................................................22

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 What I Need to Know

Hello learner! This module was designed and written with you in mind.
Primarily, its scope is on the preparation of the Statement of Financial Position
(SFP). As future individuals in the field of business, it is important that the SFP be
prepared accurately and objectively to guide various users in making rational
decisions.
While going through this module, you are expected to:
1) classify items of the SFP;
2) solve problems related to SFP; and
3) prepare the SFP in account and report form.
By the way, always remember to use a separate sheet of paper for you to
write your answers on the different activities presented in this learning module. DO
NOT ANSWER here directly.
Now, here is an outline of the different parts of your learning module. The
descriptions will guide you on what to expect on each part of the module.

Icon Label Description

This states the learning objectives that you need
What I need to know
to achieve as you study this module.

This is to check what you already know about the

What I know
lesson on this module. If you answered all the
questions here correctly, then you may skip
studying this module.
This connects the current lesson with a topic or
What’s In
concept necessary to your understanding.

This introduces the lesson to be tackled through

What’s New
an activity.

This contains a brief discussion of the learning

What Is it
module lesson. Think of it as the lecture section
of the lesson.
These are activities to check your understanding
What’s More
and to apply what you have learned from the
lesson.
This generalizes the essential ideas tackled from
What I have Learned
this module.
This is a real life application of what you have
What I Can Do
learned.

This is an evaluation of what you have learned

Post-Assessment
from this learning material.

Additional Activity This is an activity that will strengthen and fortify

your knowledge about the lesson.
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 What I Know

If you answer all the test items correctly in this pretest, then you may skip
studying this learning material and proceed to the next learning module.

Direction: Choose the letter of the correct answer.

1. What are the end-products of the accounting process?
A. Books of Accounts C. Financial Statements
B. Budgets D. Tax Returns

2. What is the classification of the account Unused Supplies?

A. Current Assets C. Non-Current Assets
B. Current Liabilities D. Non-Current Liabilities

3. These are accounts deducted from their related asset accounts.

A. Adjunct B. Balance C. Contra D. Deductions

4. Which of these derivations of the accounting equation is correct?

A. A = L – OE B. A – L = OE C. A + L = OE D. A + OE = L

5. What is the difference of Accounts Receivable and Allowance for Bad Debts?
A. Net Allowance Value C. Net Realizable Value
B. Net Book Value D. Net Stock Value

6. This type of ruling indicates that the amount is already final.

A. Single B. Double C. Triple D. none of these

7. This is the residual assets of the enterprise

A. Assets B. Intangibles C. Liabilities D. Owner’s Equity

8. What is the common term for the Statement of Financial Position?

A. Balance Sheet C. Income Statement
B. Cash Flows D. Worksheet

9. What is the classification of the account Land in the SFP?

A. Current Assets C. Non-Current Assets
B. Current Liabilities D. Non-Current Liabilities

10. A business reported total assets of P500,000 and total owner’s equity of
P200,000. How much is total liabilities?
A. 200,000 B. 300,000 C. 500,000 D. 700,000

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11. What form of SFP is presented in vertical orientation?
A. Account Form B. Direct Form C. Indirect Form D. Report Form

12. A business has P100,000 payable to a supplier. The amount is due on April 5,
2021. What is the classification of this on the SFP as of December 31, 2019?
A. Current Assets C. Non-Current Assets
B. Current Liabilities D. Non-Current Liabilities

13. An entity begins its accounting period in August 1 and ends it on July 31 of the
succeeding year. What type of year does the business adopt?
A. Calendar B. Current C. Fiscal D. Normal

14. What is the classification of intangible assets in the SFP?

A. Current Assets C. Non-Current Assets
B. Current Liabilities D. Non-Current Liabilities

15. What is the difference of the cost of a fixed asset and its accumulated
depreciation?
A. Net Allowance Value C. Net Realizable Value
B. Net Book Value D. Net Stock Value

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Lesson: Statement of Financial Position

What’s In
Take time to review the steps in the accounting process to see how far you
have gone:
Step 1: Journalizing transactions
Step 2: Posting transactions to the
Ledger Step 3: Preparation of Trial Balance
Step 4: Adjusting Journal Entries
Step 5: Preparation of
Worksheet
Step 6: Preparation of Financial Statements
a) Statement of Comprehensive Income
b) Statement of Financial Position
c) Statement of Changes in Owner’s Equity
d) Cash Flow Statement
e) Notes to Financial Statements
Step 7: Closing Entries
Step 8: Preparation of Post-Closing Trial Balance
Step 9: Reversing Entries

Recall in the previous lessons in Fundamentals of Accountancy and Business

Management 1 the accounting equation: Assets = Liabilities + Owner’s Equity. These
are basically the elements found in the SFP.
These accounting elements are defined by the International Financial
Reporting Standards (IFRS) as follows:

An asset is a resource controlled by the entity as a result of past events and

from which future economic benefits are expected to flow to the entity.

A liability is a present obligation of the entity arising from past events, the
settlement of which is expected to result in an outflow from the entity of
resources embodying economic benefits

Owner’s Equity is the residual interest in the assets of the entity after
deducting all its liabilities. This is simply the difference of assets and liabilities.

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 What’s New

Activity : My Personal Financial Position

Directions:
a. Identify the things you owned (assets) and how much they cost. If they were
purchased several years ago, estimate their current market value. Include
here any sum of money collectible from people or entities. A example is
provided on the first row for your guidance.

Items that you owned Amount

Ex. Cash deposits in community cooperative 26,000.00
Bedroom Furniture 10,000
Motorcycle 15,000
Laptop 37,000
Appliances 23,000
Pre-paid Internet Connection 1,500
Clothes 10,000
Phone 10,000
Scouting Gears 15,000
Total P121,500

b. Think of the people or entities you owe money to (liabilities) and the amount
you owed them. An example is provided for your guidance.

Whom you owe to Amount

Ex. BENECO – unpaid electric bills 857.50
Unpaid water bills 500.00
Debt to mom 1,500.00
Rice Dealer 5,000.00
Total P 7,000

c. Now, complete the equation below to determine your Owner’s Equity.

Assets – Liabilities = Owner’s Equity

121,000-7000= P 116,000

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 What Is It
The Financial Reports
The product of the accounting process are the financial reports or financial
statements. These are prepared at the end of each accounting period and are given
to various users for them to make informed decisions. A complete set of an entity’s
financial reports includes:
1. Statement of Financial Position (SFP)
2. Statement of Comprehensive Income (SCI)
3. Statement of Changes in Equity (SCE)
4. Cash Flow Statement (CFS)
5. Notes to Financial Statement

The Statement of Financial Position (SFP)

The SFP, also known as the Balance Sheet or Statement of Condition shows
an entity’s assets, liabilities and owner’s equity (net assets) at a given point in time.
Businesses prepare their SFP at the end of each accounting period or year. This is
their reporting date. Typically, businesses adopt the calendar year which allow them
to end the accounting period on December 31. Some uses the fiscal year where one
period is also equivalent to 12 months but ends on the last day of any month except
December.
Accountants, however, may prepare an SFP at any given time (i.e. monthly,
quarterly or semi-annually). These are called interim reports and are used primarily
by management in making short-term decisions.

Current and Non-Current Assets

Assets are classified into current and non-current. An entity shall classify an
asset as current when it expects to realize the asset, or intends to sell or consume it,
in the entity’s normal operating cycle. The normal operating cycle of a business
entity is one year or twelve months. Typically classified as current assets are Cash,
Accounts Receivable, Merchandise Inventories, Supplies and Prepaid Expenses.
In the case of cash in bank, it’s use or withdrawal must be unrestricted for at
least one year following the end of the accounting period or reporting date.
In the case of Accounts Receivable, they must be expected to be realized or
collected within one year following the reporting date.
To illustrate, assume that a business has three receivables as of December
31, 2019. Receivable 1 is due on March 1, 2020. Receivable 2 is due on September
30, 2021. Receivable 3 is due on August 31, 2020. Which among these are current?
Non- current?

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 Counting the number of months from the reporting date to maturity date of the
receivables, Receivable 1 is due in 2 months, Receivable 2 in 21 months, and
Receivable 3 in 8 months. With that in mind, which of these are due in one year or
less, and hence are current assets?
Receivables 1 and 3 are current assets because they are expected to be
realized within one year from the reporting date. Meanwhile, Receivable 2 is non-
current asset since the collection period is beyond one year from reporting date.
Now that you have learned the concept of current assets, it is expected that
assets that do not fall under this category shall be classified as non-current.
So, what are non-current assets?
Non-Current Assets are long-lived assets having useful lives of more than one
year. Property, Plant and Equipment or Fixed Assets (e.g. Land, Building,
Equipment, Machinery, and Furniture and Fixtures) and Intangible Assets (e.g.
Copyright, Patent, Franchise and Licenses) belong to this category.

Presentation of Contra-Asset accounts

You have learned in the previous accounting lessons two contra-asset

accounts – Allowance for Bad Debts and Accumulated Depreciation. Can you
still recall why are they called contra-asset accounts? They are called such because
they are presented as deductions from their related asset accounts.
The Allowance for Bad Debts account is shown as a deduction from
Accounts Receivable. The difference is the Net Realizable Value (NRV) of the
Receivable. An illustration is shown below:

Accounts Receivable P 150,000

Less: Allowance for Bad Debts Accounts Receivable
5,000– Net*
P 145,000

*This is the label of a Receivables’ NRV in the SFP

The Accumulated Depreciation account is shown as a deduction from its

related Fixed Asset account. The difference is the Net Book Value (NBV) of the
asset. An illustration is shown below:

Office Equipment P 500,000

Less: Accumulated Depreciation 150,000
Office Equipment – Net of Depreciation* P 350,000

*This the label of an asset’s NBV in the SFP

Current and Non-current Liabilities

Liabilities on the other hand are also classified as current or non-current. A
liability is current if it is expected to be settled within one accounting period. Trade or
Accounts Payables, Taxes Payable, Salaries Payable and Utilities Payable are some

7
of the accounts under this category as they are expected to be paid within a short-
period of time (within one accounting period), if not immediately.
Non-current liabilities are long-term obligations of the enterprise maturing
beyond one year from the reporting date or the date of the SFP. Loans Payable and
Mortgage Payable are usually classified under this category because they typically
mature after 2, 5, 10 or more years.
It should be noted however, that liabilities classified as non-current in the
previous period SFP can be classified as current in the present period SFP if
maturity period has been reduced to one year or less.

Owner’s Equity
The owner’s equity account is simply the difference of the total assets and the
total liabilities. This module is concern with the preparation of SFP of a sole
proprietorship. The owner’s equity section of such type of business presents only
one account – the name of the owner followed by the word capital or equity. Hence,
if the owner is John Reyes, his capital account is “John Reyes, Capital” or “Reyes,
Capital.”

Report Form vs. Account Form of the SFP

An entity’s SFP can be presented in one of two ways, account form and report
form, depending on the preference of those who prepared it.
The account form SFP is presented in a horizontal format, with information in
two columns beside each other. The left column of the account form balance sheet
lists assets, while the right column lists liabilities and equity. Naturally, the last line in
each column lists the total value of all assets and liabilities and owner’s equity,
respectively. The account form balance sheet can be easier to use when information
is being presented for multiple periods, and it allows the reader to verify that the
ledger is in balance at a glance. A pro-forma SFP in report form is presented below:

Aling Nena’s Sari-Sari Store Statement of Financial Position

As of December 31, 2019

Assets Liabilities
Current Assets xxxCurrent Liabilities xxx xxx
Non-Current Assets xxxNon-Current Liabilities xxxx
Total Assets XXXXTotal Liabilities

Owner’s Equity xxx

Total Liabilities and

Owner’s Equity XXXX

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 The report form balance sheet is presented in a vertical orientation, and is
essentially one column that spans the entire width of a page. Starting with assets,
the report form balance sheet provides a total value at the end of the assets section,
followed by liabilities and equity, with the final line of the report form balance sheet
providing the total combined value of liabilities and equity. This is the typical format
of most SFPs. A pro-forma SFP in report form is presented below:

Aling Nena’s Sari-Sari Store Statement of Financial Position As of December 31, 2019

Assets
Current Assets
Non-Current Assets
Total Assets
xxx xxx
XXXX

Liabilities
Current Liabilities xxx xxx
Non-Current Liabilities Total Liabilities xxxx

Owner’s Equity xxx

Total Liabilities and Owner’s Equity XXXX

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SFP Format
Presented below is a sample SFP for a sole proprietorship business in report
form. Study the format carefully then read the guidelines on the preparation of such
report.

Aliwana Business Consultancy Services

Statement of Financial Position
As of December 31, 2019

ASSETS
Current Assets
Cash on Hand and in Bank 186,700.00
Accounts Receivable 85,400.00
Allowance for Bad Debts 12,000.00
Accounts Receivable - Net 73,400.00
Unused Office Supplies 7,600.00
Prepaid Rent Expense 40,000.00
Total Current Assets 307,700.00

Non-Current Assets
Office Equipment 250,000.00
Accumulated Depreciation - Office Equipment 50,000.00
Office Equipment - Net of Depreciation 200,000.00
Office Furniture and Fixture 175,000.00
Accumulated Depreciation - Office Furniture and Fixture 32,000.00
Office Furniture and Fixture - Net of Depreciation 143,000.00
Total Non-Current Assets 343,000.00

Total Assets 650,700.00

LIABILITIES
Current Liabilities
Accounts Payable 28,500.00
Taxes Payable 8,200.00
SSS, PHIC and HDMF Premiums Payable 2,750.00
Total Current Liabilities 39,450.00

Non-Current Liabilities
Bank Loans Payable 100,000.00
Long-term Notes Payable 80,000.00
Total Non-Current Liabilities 180,000.00

Total Liabilities 219,450.00

OWNER'S EQUITY
Aliwana, Capital 431,250.00

Total Liabilities and Owner's Equity 650,700.00

As you can see from our sample illustration, each balance sheet account is
listed in the accounting equation order – Assets = Liabilities + Equity

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Guidelines in the Preparation of SFP
1. Heading
The SFP must have a heading written on top of the report. The heading
has three lines. The first line is the name of the business. In the
illustration above, what is the name of the business? The second is the
title of the report which is Statement of Financial Position. The third line
is the phrase “As of …..” plus the date when the report was made or
the cut-off date of each accounting period. Often, businesses use the
calendar period ending on the last day of the calendar year which is
December 31. Thus SFP for the year 2020 will be labelled “As of
December 31, 2020”

2. Columns
SFP has two columns, the left is for the account titles while the right is
for the amounts. The amount column may have two or more sub-
columns. The first sub-column is used to present contra-asset accounts
as you have read earlier.

You might to consider the left as for words and the right for numbers.
The account titles should not extend and overlap with the column for
the amounts. It should be noted however, that these columns have no
headers or lables.

3. Labels and Arrangement of Accounts

1. Write the word “Assets” just after the heading. Then proceed to
enumerate all the current assets in order of liquidity with their
corresponding balances. Get the sum of these then label it as “Total
Current Assets” after the last current asset account.
2. Afterwards, enumerate all the non-current assets with their
corresponding balances. Get the sum and label it as “Total Non-
Current Assets” after the last non-current asset account.
3. Finally, for the asset part, get the sum of the Total Current Assets
and the Total Non-Current Assets. Label is as “Total Assets.”
4. Write the word “Liabilities” after “Total Assets”.
5. Proceed to enumerate all the Current Liabilities with their
corresponding balances. Get the sum and label is as “Total Current
Liabilities.”
6. Similarly, enumerate all the non-current liabilities with their
corresponding balances. Get the sum then label it as “Total Non-
Current Laibilities.”
7. Enumerate all the non-current liabilities with their corresponding
balances. Get the sum then label it as “Total Non-Current
Liabilities.”
8. Get the sum of the Total Current and Non-Current Liabilities then

11
label it as “Total Liabilities.”

12
 9. Write the word “Owner’s Equity” after “Total Liabilities.”
10. Write the equity account and its corresponding amount.
11. Get the sum of Total Liabilities and the equity account then label it
as “Total Liabilities and Owner’s Equity.” This should be the last line
of the SFP.
12. The Total Assets and Total Liabilities and Owner’s Equity must be
equal in amount.

4. Single-Ruling and Double-Ruling

Single-rulings are used to indicate that a mathematical operation has
been applied. The last amount included in the operation is single-ruled.
The next amount after a single-ruling is either a sum or a difference of
the items above it.

As you study the sample SFP above, can you locate the single-rulings.
Now, using your calculators, determine if the amounts after the single-
rulings are sums or differences of the items above it.

Double-rulings on the other hand indicate that the amounts double-

ruled are the final amounts. Notice in the illustration that there are only
two double-rulings – the amounts corresponding to Total Assets and
Total Liabilities and Owner’s Equity.

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 What’s More
Activity 1: Classifying Accounts

Directions: The following data were taken from the worksheet of Valentino Travel
and Tours for the month of June 2020. This is a sole proprietorship business owned
by Mr. Fred Valentino. The reporting date is June 30, 2020. Classify the accounts as
to what accounting element they belong (Assets, Liabilities or Owner’s Equity). Then
identify further if they are current or non-current. An example is provided for your
guidance.

Classification
A – Assets C – Current
L – Liabilities NC – Non-
Accounts Amount
OE – Current
Owner’s NA – Not
Equity Applicable
Ex. Furniture and Fixtures 100,000 A NC
1. Accounts Payable 12,000 L C
2. Accounts Receivable 88,000 A C
3. Building 1,200,000 A NC
4. Cash on Hand 23,000 A C
5. Cash in Bank 389,500 A C
6. Equipment 187,000 A NC

7. Land 500,000 A NC
8. Loans Payable (due Dec. 31, L C
75,000
2020)
9. Loans Payable (due May 5, L NC
800,000
2022)
10. Notes Receivable (due Oct. 8, A C
150,000
2020)
11. Notes Receivable (due Dec. 10, A NC
90,000
2021)
12. Prepaid Insurance 6,000 A C

13. Taxes Payable 15,000 L C

14. Unused Supplies 8,500 A C

15. Valentino, Capital ? OE NA

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Assessment 1:

Direction: Using your answers in Activity 1: Classifying Accounts, group account

titles with similar classification in order to solve and answer these questions.
1. How much is total current assets? P 665,000
2. How much is total non-current assets? P1,977,000
3. How much is total assets? P 2 , 6 4 2 , 0 0 0
4. How much is total current liabilities? P102,000
5. How much is total non-current liabilities? P 800,000
6. How much is total liabilities?P902,000
7. How much is owner’s equity? P 1,740,000

Activity 2: Presentation of Contra-Asset Accounts

Directions: Read the following problems then answer the questions that follow. You
may need a calculator in this part.

1. At the end of the accounting period, Accounts Receivable has a balance of

P85,000. The accountant estimated that 5% of the ending balance of the
receivables is doubtful of collection.
a) How much is the Allowance for Bad Debts? P4,250
b) How much is the Net Realizable Value (NRV) of the Accounts
Receivable to be reported in the SFP? P80,750

2. On January 1, 2018, an equipment was acquired for P240,000. The

accountant ascertained that the equipment has an estimated useful life of
6 years without scrap value. The equipment depreciates at a uniform
amount of P40,000 per year.
a) How much is the Accumulated Depreciation on December 31, 2020?
P80,000
b) How much is the Net Book Value of the equipment to be reported in
the SFP? P160,000

Assessment 2:

Directions: Fill-in the blanks with the correct answer. Choose from the set of words/
phrases enclosed in parentheses.

1. Contra-asset accounts are DEDUCTED FROM the related asset account.

(added to, deducted from)
2. Accounts Receivables are reported in the SFP at NET REALIZABLE VALUE
(Net Realizable Value, Net Book Value)
3. Fixed assets are reported in the SFP at N E T B O O K V A L U E
(Net Realizable Value, Net Book Value)

15
 What I Have Learned

Activity: Filling in those blanks!

1. The end product of the accounting process are the FINANCIAL STATEMENT .

2. Asset and Liability accounts may be classified as PERMANENT ACCTS or REAL

ACCTS .

3. The Net Book Value of a fixed asset is the difference between the
EQUIPMENT and ACCUMULATED DEPRECIATION .

4. The difference of the Accounts Receivable and Allowance for Bad Debts is the Net
REALIZABLE VALUE of the receivable

5. Statement of Financial Position can be prepared in A C C O U N T form and

REPORT form.

6. The first line in the heading of the SFP is the HEADING .

7. In the SFP, the amounts of TOTAL ASSETS and the

TOTAL LIABILITIES AND OWNERS EQUITY must always be
equal.

8. Property, Plant and Equipment (PPE) are long-lived assets. They are also known
as NON- CURRENT ASSETS

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 What I Can Do

Activity 1: Preparing SFP in Report Form

Direction: Read the problem carefully then prepare the SFP in report form.

Problem: Mr. Mark Avila is the operator of Kredenz Taxi Services in Baguio City.
The Land Transportation, Franchising and Regulatory Board (LTFRB) as well as the
Bureau of Internal Revenue (BIR) are requiring him to submit a Statement of
Financial Position of his business. He asked you to prepare the SFP in report form.
He provided you with the following accounts and balances as of December 31, 2019.

Account Titles Ending Balances

Cash 180,000
Accounts Receivable 96,000
Allowance for Bad Debts 5,000
Vehicle Supplies 18,000
Prepaid Garage Rental 20,000
Vehicles 800,000
Accumulated Depreciation - Vehicles 175,000
Tools 350,000
Accumulated Depreciation - Tools 20,000
Accounts Payable 36,500
Commissions Payable 16,000
SSS, PHIC and HDMF Payable 2,700
Bank Loan Payable – due 2024 500,000
Cooperative Loan Payable – due 2022 200,000
Avila, Capital 508,800

Activity 2: Preparing SFP in Account Form

Direction: Read the problem carefully then prepare the SFP in account form.

Problem: Ms. Mary Robles is a freelance online English teacher. The name of her
business is Robles Language Tutorial Services. She wants to upgrade her skills and
equipment, so she applied for a loan with a local bank. She asked for your
assistance in preparing the SFP as required by the bank. Here are the ledger
balances of the accounts of her business as of June 30, 2020. She arranged it
alphabetically. Sort these accounts and prepare the SFP in account form.

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 Account Titles Ending Balances
Accounts Receivable 18,000
Accumulated Depreciation - Computer Equipment 8,600
Accumulated Depreciation - Furniture 8,500
Allowance for Bad Debts 3,200
Cash 52,000
Computer Equipment 42,000
Credit Cards Payable 27,000
Furniture 20,000
Office Supplies 2,300
Prepaid Internet 3,000
Robles, Capital 81,450
SSS, PHIC and HDMF Payable 1,200
Taxes Payable 6,500
Utilities Payable 850

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 Post-Assessment

Direction: Choose the letter of the correct answer.

1) This is the residual assets of the enterprise
A. Assets B. Intangibles C. Liabilities D. Owner’s Equity

2) Which of these derivations of the accounting equation is correct?

A. A = L – OE B. A – L = OE C. A + L = OE D. A + OE = L

3) What are the end-products of the accounting process?

A. Books of Accounts C. Financial Statements
B. Budgets D. Tax Returns

4) What is the classification of the account Unused Supplies?

A. Current Assets C. Non-Current Assets
B. Current Liabilities D. Non-Current Liabilities

5) These are accounts deducted from their related asset accounts.

A. Adjunct B. Balance C. Contra D. Deductions

6) What is the difference of Accounts Receivable and Allowance for Bad Debts?
A. Net Allowance Value C. Net Realizable Value
B. Net Book Value D. Net Stock Value

7) This type of ruling indicates that the amount is already final.

A. Single B. Double C. Triple D. none of these

8) What form of SFP is presented in vertical orientation?

A. Account Form B. Direct Form C. Indirect Form D. Report Form

9) What is a common term for the Statement of Financial Position?

A. Balance Sheet C. Income Statement
B. Cash Flows D. Worksheet

10)What is the classification of the account Land in the SFP?

A. Current Assets C. Non-Current Assets
B. Current Liabilities D. Non-Current Liabilities

11)An entity begins its accounting period in August 1 and ends it on July 31 of the
succeeding year. What type of year does the business adopt?
A. Calendar B. Current C. Fiscal D. Normal

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12) What is the classification of intangible assets in the SFP?
A. Current Assets C. Non-Current Assets
B. Current Liabilities D. Non-Current Liabilities

13)What is the difference of the cost of a fixed asset and its accumulated
depreciation?
A. Net Allowance Value C. Net Realizable Value
B. Net Book Value D. Net Stock Value

14)A business reported total assets of P500,000 and total owner’s equity of
P200,000. How much is total liabilities?
A. 200,000 B. 300,000 C. 500,000 D. 700,000

15)A business has P100,000 payable to a supplier. The amount is due on April 5,
2021. What is the classification of this on the SFP as of December 31, 2019?
A. Current Assets C. Non-Current Assets
B. Current Liabilities D. Non-Current Liabilities

Additional Activity
Activity: SALN vs. SFP

Directions: All government employees are required to file their Statement of Assets,
Liabilities and Net Worth (SALN) at the end of each calendar year (December 31).
Interview any government employee (family member, neighbor, friend) to gain
insights on the content of the SALN. How is the SALN similar or different from the
SFP?
Some of the government employees that you can interview are your public school
teachers, police officers, nurses and doctors in government hospitals. They may be
your friends in your social media account so the interview maybe done online or off-
line.

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For inquiries or feedback, please write or call: Department of Education-Schools Division of
Telefax:
Email Address:

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