Summary Business Statement of Financial Position

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Section 5 Statement of financial position

Þ Business owners may be interested to know how much
their business is worth – this along with other details is
given on the statement of financial position
Þ Different to income statement
Þ Income statement records the income and expenses of a
business as well as the profit or loss it has made in a year
Þ The statement of financial position records the value or
worth of the business usually at the end of a financial year
Þ They list and give value to all the assets and liabilities of
the business


Assets
Are items of value owned by the business
Land, buildings, equipment etc. are examples of non-current or
fixed assets – these last more than a year
Most fixed assets apart from land depreciate (their value falls
over time)
Intangible assets do not physically exist but have value for
example brand names
Cash, stock etc. are held for short periods of time – current
assets

Liabilities
Are items owned by the business
Non-current liabilities are long term loans that do not have to be
repaid within a year
Current Liabilities are amounts owed by the business which
must be repaid within a year

Total assets – Total liabilities = owners’ equity