A statement of financial position shows assets, liabilities and owner’s equity of a business at the end of

the financial year.

Assets are everything that the business own. There are 2 types of assets:

1. Non- current assets – Items bought to be used by the business for a long period of time.

Examples

Property Premises Equipment

Land Warehouse Computer

Buildings Plant and machinery Motor vehicles

2. Current Assets – Everything that the business own for a short period of time and the value of which
changes almost every day.

Examples

Inventory of goods

Trade receivables (Amount owed by credit customers)

Cash in hand and at bank

Liabilities are everything that the business owes. There are 2 types of liabilities:

1. Non current liabilities – amount owed more than one year

Example : Loan from Bank(long term loan),mortgage

2. Current liabilities – amount owed less than one year

Example : Trade payables ( amount owed to credit suppliers)

 FORMAT

Statement of financial position as at 31st December 2016

$ $

Non-Current assets

Property, plant and equipment a ***

Fixtures and Fittings b ***

Total non-current assets a+b ***

Current Assets

Closing inventory c ***

Trade receivables d ***

Cash and bank e ***

Total current assets c+d+e ***

Total Assets (a + b) + (c + d + e) ****

Owner’s Equity and Liabilities

Owner's equity f ***

Current Liabilities

Trade payables g **

Other payables h **

Bank overdraft i *** ****(i+g+h)

Non-current Liabilities

Long term loan/Mortgage j ***

Total Owner’s Equity and Liabilities ****(f+g+h+i+j)

For revision purpose please label first which type of asset or liability it is and
confirm your answers before preparing the statement of financial position
VERY IMPORTANT TO READ THE THEORY/DEFINITIONS/REASONS/PURPOSES
ETC

Q1. Prepare a statement of financial position from the following details as at 31st December 2016

Motor vehicles 35 200

Trade Receivables 31 330

Inventory - 31st Dec 14 000

Cash and Bank 2 540

Trade payables 35 800

Owner’s equity 76070

Fixtures and Fittings 28 800

Q2 – Prepare a statement of financial position as at 31 st December 2012 from the following

information.

DR CR

Fixtures and Fittings 18 000

Land and buildings 120 000

Trade receivables 21 000

Cash and cash equivalents 11 000

Closing inventory 12 000

Trade payables 9 000

Other payables 2 000

Other receivables 1 200

Long term Bank loan 32 000

Owner’s Equity 140 200

Q3 – Prepare a statement of financial position as at 31 st December 2011 from the following
information.

Office equipment 24 600

Plant and machinery 140 300

Trade receivables 34 000

Cash and Bank 11 000

Closing inventory 13 600

Trade payables 12 980

Other payables 1 100

Other receivables 2 240

Short term Bank loan 43 000

Owner’s equity 168660

Q4 – Prepare a statement of financial position as at 31 st December 2013 from the following

information.

Warehouse 112 500

Plant and machinery 130 000

Trade receivables 34 000

Cash and cash equivalents 13 000

Closing inventory 28 000

Trade payables 23 000

Other payables 3 400

Other receivables 1 400

Short term Bank loan 29 000

Owner’s equity 263 500

Q5. Prepare a statement of financial position from the following details as at 31st
December 2014

Other payables 400

Machinery 40 000

Equipment 30 000

Inventory - 31st Dec 15 000

Trade Receivables 18 000

Cash and Bank 12 000

Trade payables 14 000

Loan from bank Long term 11 000

Owner’s equity 90 800

Other receivables 1 200

Q6. Prepare a statement of financial position from the following details as at 31st
December 2019

DR CR

Equipment 560

Machinery 1 280

Other receivables 120

Inventory - 31st Dec 1 680

Trade Receivables 890

Cash and Bank 1 010

Trade payables 650

Loan from bank(long term loan) 1 800

Owner’s equity 2 960

Books of prime entry
 Label for each question
Question 1
Dec 1 Started business with cash $ 2 500.

4 Purchased goods by cash $ 1 450.

5 Purchased goods on credit from Raj $ 300

7 Purchased equipment by cash $ 300.

9 Sold goods for cash $ 1 900.

11 Sold goods on credit to Shyam $ 400

14 Paid insurance by cash $ 400.

18 Received commission by cash $ 250.

31 Withdrew cash for own use $ 150.

QUESTION 2

Jan 1 Started business with cash $ 2 700.

5 Purchased equipment by cash $800.

9 Purchased goods by cash $ 1 250.

12 Purchased goods on credit from Ram $ 650

13 Paid insurance by cash $ 600.

15 Withdrew cash for own use $ 900.

23 Received commission by cash $ 150.

28 Sold goods for cash $ 1 800.

31 Sold goods on credit to Lucky $ 750

QUESTION 3
2017
June 1 Started business with £17,500 in cash.
5 Bought office furniture on credit from Dream Ltd for £2,100.
8 Bought a van paying by bank £5,250.
12 Bought equipment from Pearce & Sons by cash £2,300.
18 Returned faulty office furniture costing £260 to Dream Ltd.
25 Sold some of the equipment for £200 cash.
28 Took £130 out of the bank and added to cash.
30 F. Brown lent us £4.000 -sending us the money by cheque
QUESTION 4
2016
June 1 Started business with £16,000 in the bank.
2 Bought van paying by cheque £6,400.
5 Bought office fixtures £900 on credit from Old Ltd.
12 Took £180 out of the bank and put it into the cash till.
15 Bought goods paying by cash £120.
19 Paid Insurance by from the bank account.
21 A loan of £500 cash is received from B. Berry.
25 Paid £400 of the cash in hand into the bank account.
30 Sold goods on credit to Masa 800
DOUBLE ENTRY
 Question 1

Account to Debit Account to Credit

Dec 1 Started business with cash $ 2 500.
4 Purchased goods by cash $ 1 450.
5 Purchased goods on credit from Raj $
300
7 Purchased equipment by cash $ 300.
9 Sold goods for cash $ 1 900.
11 Sold goods on credit to Shyam $ 400
14 Paid insurance by cash $ 400.
18 Received commission by cash $ 250.
31 Withdrew cash for own use $ 150.
QUESTION 2
Account to Debit Account to Credit
Jan 1 Started business with cash $ 2 700.
5 Purchased equipment by cash $800.
9 Purchased goods by cash $ 1 250.
12 Purchased goods on credit from Ram $
650
13 Paid insurance by cash $ 600.
15 Withdrew cash for own use $ 900.
23 Received commission by cash $ 150.
28 Sold goods for cash $ 1 800.
 31 Sold goods on credit to Lucky $ 750
QUESTION 3
2017
Account debited Account
credited
June 1 Started business with £17,500 in
cash.
5 Bought office furniture on credit from
Dream Ltd for £2,100.
8 Bought a van paying by bank £5,250.
12 Bought equipment from Pearce &
Sons by cash £2,300.
18 Returned faulty office furniture
costing £260 to Dream Ltd.
25 Sold some of the equipment for £200
cash.
28 Took £130 out of the bank and added
to cash.
30 F. Brown lent us £4.000 -sending us
the money by cheque
QUESTION 4
2016
Account debited Account credited
June 1 Started business with £16,000
in the bank.
2 Bought van paying by cheque
£6,400.
5 Bought office fixtures £900 on credit
from Old Ltd.
12 Took £180 out of the bank and put
it into the cash till.
15 Bought goods paying by cash £120.
19 Paid Insurance by from the bank
account.
 21 A loan of £500 cash is received
from B. Berry.
25 Paid £400 of the cash in hand into
the bank account.
30 Sold goods on credit to Masa 800
QUESTION 5
Account debited Account credited
a) Bought trailer for cash.
(fa) Paid creditor, J. Tough, by
cheque.
(c) Repaid W. Small's loan by
cash.
(d) Sold trailer for cash.
(e) Bought office equipment
on credit from Dexter Ltd.
(f) A debtor, T. Walls, pays us
by cash.
(g) A debtor, L. Tait, pays us by
cheque.
(h) Owner puts a further
amount into the business by
cheque.
(i) A loan of £650 in cash is
received from F. Burns.
(j) Paid a creditor, J. Fife, by
cash.
MIXED THEORY
1. Define the following terms
a. Accounting
b. Book keeping
c. Trade payables/creditors
d. Trade receivables/debtors
e. Bank overdraft
f. Statement of financial position
g. Books of prime entry
h. Double entry
2. Define the following and give an example of each
a. Non-current asset
b. Non-current liability
c. Current asset
d. Current liability
3. Give and explain the 7 books of prime entry
4. Why is statement of financial position prepared?
5. Give 3 reasons for calculation profit in the business
6. Give 3 reasons why accounting is important in the business
7. Give 3 advantages of book keeping
8. Give 3 disadvantages of book keeping
9. What is the golden rule of accounting