What is the Statement of Financial position?
Statement of Financial position is a statement that shows the assets of an organisation, what that organisation owns. Statement of Financial position shows its liabilities; it means what the organisation owes to others at a particular point in time. Although it is generally drawn up at the end of the accounting period. A Statement of Financial Position can be drawn up at any time.
In particular, the Statement of Financial Position shows:
- The value of the organisation’s assets – for example, property, vehicles, machinery, equipment, inventory, trade receivables, cash and cash equivalents
- The liabilities of the company – for example, equity, trade payables and bank loans
- The equity of the business – for example (in the case of the sole trader) the equity invested or (in the case of a company) the total value of the shares owned by the shareholders.