Home / Summaries / Accskills 1 / statement-position-financial

Statements of financial position

5 important questions on Statements of financial position

Why is the statement of financial position not part of the double entry system?

All what is done is to list the asset, capital and liabilities balances so as to form a statement of financial position. None of the accounts have been closed off. Nothing is entered in the ledger accounts.

How are non-current assets listed?

They are listed first in the statement of financial position starting with those the business will keep the longest, down to those which will not be kept so long.

How are current assets listed?

They are listed in increasing order of liquidity, that is starting with the asset furthest away from being turned into cash, and finishing with cash itself.

How does the statement of financial position differ from the income statement?

The statement of financial position is a position statement, it is shown as being at one point in time. The income statement is for a period of time, e.g. a whole year.

What are the net current assets or working capital?

The difference between current assets and total liabilities. It is the amount of resources the business has in a form that is readily convertible into cash.