Statement of Financial

Position (SFP)
FABM 2: Chapter 1
Elements of Financial Position
•Assets
•Liabilities
•Equity (also called capital, net assets, net
worth)
 Presentation of SFP/Balance
Sheet

•Current Assets
•Non-current Assets
 Current and Non-current Assets
Current Assets Non-current Assets
1. Cash 1. Land
2. Accounts receivable (including Allowance of 2. Building ( including Accumulated
Doubtful Accounts) Depreciation)
3. Inventory 3. Equipment ( including Accumulated
4. Prepaid Assets (e.g prepaid supplies, Depreciation)
prepaid insurance)
 Current and Non-current Liabilities

Current Liabilities Non-current Liabilities

1. Accounts Payable 1. Long-term Note payable (nontrade

2. Salaries Payable note payable that matures beyond
3. Utilities Payable 1 year from the end of the reporting
4. Unearned income period)
 Illustration : Current and noncurrent assets

a Amount in Peso
Cash 10, 000
Account receivable 20, 000
Notes receivable(nontrade)-P30,000 w/in 1 yr 50, 000
Inventory 65, 000
Prepaid supplies 5, 000
Land 100, 000
Building 400, 000
Accumulated depreciation (120, 000)
 Solutions:

Account Name Amount in Peso Account Name Amount in Peso

Cash 10, 000 Notes receivable 20, 000
Account receivable 20, 000 Land 100, 000
Notes receivable 30, 000 Building 400, 000
Inventory 65, 000 Accum. depreciation (120, 000)
Prepaid supplies 5, 000
 Illustration 2: Current and noncurrent Liabilities

Account Name Amount in Peso

Account payable 30, 000
Notes payable(nontrade) P10, 000 due w/in 1 yr 500, 000
Rent payable (due w/in 1 yr) 10, 000
Utilities payable 5, 000
Interest payable 100, 000
Salaries payable 400, 000
Unearned income 120, 000
TOTAL LIABILITIES 1, 165, 000
 SOLUTION:
Accounts payable 30, 000 Notes payable 400, 000
Notes payable 100, 000
Rent payable 10, 000
Utilities payable 5, 000
Interest payable 100, 000
Salaries payable 400, 000
Unearned 120, 000
income
TOTAL CURRENT 765, 000 TOTAL 400, 000
LIABILITIES NONCURRENT
LIABILITIES
 Sample Line items in the SFP

Cash and cash equivalents Trade and other receivables

Cash xx Accounts receivable xx

Cash equivalents xx Allowance for bad debts xx
__________________ Notes receivable xx
Cash and cash equivalents xx Advances to suppliers xx
Trade and other receivables xx
 Terms…
• Short-term borrowings- loans with original term of 1 yr
• Current portion of long-term borrowings- maturing w/in
12 mos.
• Long-term borrowings- more than 1 yr
• Income tax payable- unpaid income taxes due to the
national government