Abm Accountancy Lesson 1

Statement of Financial
Position (SFP)
FELIXBERTO DOMINIC B. ERUELA,MSBA
STATEMENT OF FINANCIAL POSITION
 Also known as the balance sheet. This statement

 includes the amounts of the company’s total
assets, liabilities, and owner’s equity which in
totality
 provides the condition of the company on a
specific date. (Haddock, Price, & Farina, 2012)
PERMANENT ACCOUNTS
 As the name suggests, these accounts are permanent in
a sense that their balances remain intact from one
accounting period to another. (Haddock, Price, &
Farina,2012)
 Examples of permanent account include Cash, Accounts
Receivable, Accounts Payable, Loans Payable and Capital
among others. Basically, assets, liabilities and equity
accounts are permanent accounts.
 They are called permanent accounts because the
accounts are retained permanently in the SFP until their
balances become zero.
CONTRA ASSETS
 Contra assets are those accounts that are presented under the
assets portion of the SFP but are reductions to the company’s
assets. These include Allowance for Doubtful Accounts and
Accumulated Depreciation.
 Allowance for Doubtful Accounts is a contra asset to Accounts
Receivable. This represents the estimated amount that the
company may not be able to collect from delinquent customers.
 Accumulated Depreciation is a contra asset to the company’s
Property, Plant and Equipment. This account represents the
total amount of depreciation booked against the fixed assets of
the company.
2 FORMS OF SFP
 REPORT FORM
 ACCOUNT FORM
 Heading
 Name of the Company
 Name of the Statement
 Date of preparation (emphasis on the wording –
“as of”)
QUIZ
1. Learning is Fun Company had current
assets amounting to Php 100,000.
Noncurrent assets for the year totaled Php
76,000. How much is the company’s total
assets?
2. Happy Selling Company’s total
liabilities amounted Php 10,000. Total
equity had an ending balance of Php
20,000. How much is total assets?
3. Happy Selling’s had the following
accounts at year end: Cash-250,000,
Accounts Payable-70,000, Prepaid
Expense-15,000. Compute for the
company’s current assets.
4. Happy Selling’s Accounts Receivable
amounted to Php 500,000. Prepaid Expense and
Unearned Income totaled Php 30,000 and
Php10,000 respectively. Cash balance amounted
to Php 100,000 while Accounts Payable and
Inventory totaled to Php 20,000 and Php 10,000
respectively. How much is the company’s
current assets? Current liabilities?
5. Company’s Total Liabilities and Equity
amounted to Php 285,000. Total noncurrent
assets ended at Php 85,000. Cash totaled
Php50,000. Inventory amounted to Php100,000.
Assuming the company had no other assets, how
much is Accounts Receivable?
6. Total assets amounted to Php575,000. Total
equity amounted to Php 250,000. Accounts
Payable amounted to Php 50,000 while
Unearned Income totaled Php 85,000.
Assuming there are no other current
liabilities, compute for the company’s
noncurrent liabilities.
7. If assets are Php17,000 and owner's equity
is Php10,000, liabilities are
___________________.
8. At the end of the first month of operations for
Juana’s Delivery Service, the business had the
following accounts: Accounts Receivable, Php1,200;
Prepaid Insurance, Php500; Equipment, Php36,200
and Cash, Php40,650. On the same date, Juana
owed the following creditors: Nena’s Supply
Company, Php12,000; Maria’s Equipment,
Php9,500.The current assets for the Juana’s Delivery
Service are _________.
9. At the end of the first month of operations
for Juana’s Delivery Service, the business had
the following accounts: Accounts Receivable,
Php1,200; Prepaid Insurance, Php500;
Equipment, Php36,200 and Cash, Php40,650.
On the same date, Juana owed the following
creditors: Nena’s Supply Company, Php12,000
(due in 6 months); Maria’s Equipment,
Php9,500 (due after 2 years).Current
liabilities are _________.
10. If during the year total assets
increase by Php75,000 and total
liabilities decrease by Php16,000, by
how much did owner's equity
increase/decrease?
Prepare a Statement of Financial Position using
the following accounts (one in report form and
one in account form):
 Cash – 5,000
 Loans Payable – 77,500
 Accounts Receivable – 2,600
 Supplies – 2,300
 Equipment – 17,000
 Owner’s equity – 40,000
 Accounts Payable – 22,400
 Building – 113,000
You were hired by Mr. Juan Dela Cruz to prepare his sari-sari store’s
Statement of Financial Position. In order to prepare the statement, you
identified the following assets and liabilities of Mr. Dela Cruz:
a. His sari-sari store has cash deposited in a bank account amounting to P50,000
b. His sari-sari store had a lot of uncollected sales from customers amounting to P75,000
c. The total amount of merchandise left inside the store is P30,000
d. He already paid one year’s rent in advance amounting to P12,000
e. The value of all the company’s furniture amounted to P100,000
f. He bought merchandise from his supplier amounting to P25,000 and the supplier agreed
that payment can be made 2 months after year-end
g. SSS, Philhealth and Pag-ibig Payables for his one employee totaled P5,000
h. The sari-sari store had outstanding liabilities to utility companies amounting to P3,000
i. He had a loan from the bank amounting to P50,000 to be paid in 3 years
Prepare a Statement of Financial Position for the company (one in report form and one in
account form)

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Statement of Financial

 Also known as the balance sheet. This statement

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