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    Lesson 1 SFP

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    Lesson 1 SFP

    Uploaded by

    jealalyn
    4 views20 pages

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    Lesson 1 Sfp

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    Copyright:

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    Download as pptx, pdf, or txt
    4 views20 pages

    Lesson 1 SFP

    Uploaded by

    jealalyn

    Copyright:

    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd
    Download as pptx, pdf, or txt
    of 20

    FUNDAMENTALS OF ACCOUNTANCY, BUSINESS

    AND MANAGEMENT 2

    MR. EMILIANO JR. M. TAPANG


    TEACHER
    STATEMENT OF FINANCIAL POSITION
    (SFP)
    It can be defined as the “process of
    identifying, recording, and SEVERAL
    communicating economic PROCESSES
    information of the organization and
    or another entity.

    INPUTS OUTPUTS
    ACCOUNTING
    Statement of Financial Position (Balance Sheet) – This statement
    includes the amount of the company’s total assets, liabilities and
    owner’s equity which in totality provides the condition of the company
    on a specific date.

    Permanent Accounts – The accounts are permanent in a sense that their


    balances remain intact from one accounting period to another.
    Examples: Cash, Accounts Receivable, Account Payable, Loans
    Payable and Capital.
    They are called permanent accounts because the accounts are retained
    permanently in the SFP until their balances become zero.
    Temporary accounts is the contrast of permanent account, it will be zero
    balances at the end of the accounting period.
    Contra-Assets– Are those accounts that are presented under
    the assets portion of the SFP but are reductions to the
    company’s assets.
    Examples: Allowance for Doubtful Accounts (Accounts
    Receivable) and Accumulated Depreciation (Property, Plant
    and Equipment).
    Nature of Statement of
    Financial Position

    Three Major Elements of Statement of


    Financial Position
    Assets: resources on its own
    Liabilities: obligations
    Owner’s Equity
    Report Form – A form of the SFP that
    shows asset accounts first then liabilities and
    owner’s equity accounts after.

    Account Form– A form of the SFP that


    shows assets accounts on the left side and
    liabilities and owner’s equity on the right side
    just like the debit and credit balances of an
    account.
    Report Form
    Elements of Statement of Financial
    Position and Steps in Preparation
    1.Prepare the Statement Heading:

    The statements heading includes the name of the


    company, name of the statement, and date covered.
    The date of the statement of financial position is “as
    at” or “as of” the end of the period ( As of December
    31, 2023).
    Elements of Statement of Financial
    Position and Steps in Preparation
    2.Prepare the Asset Section:

    Assets are categorized as current or non-current.


    Current assets and non-current assets are arranged
    by liquidity. Liquidity is the ease of converting such
    assets into cash.
    Elements of Statement of Financial
    Position and Steps in Preparation
    2.1. Current Assets

    Assets that can be realized (collected, sold, used up)


    one year after year-end date.

    Cash, Accounts, Accounts Receivable , Merchandise


    Inventory, Prepaid Expense, etc.
    Elements of Statement of Financial
    Position and Steps in Preparation
    2.1. Non-current Assets

    Assets that cannot be realized (collected, sold, used


    up) one year after year-end date.

    Property, Plant and Equipment (furniture, building,


    land), long term investment, Intangible Assets, etc.
    Elements of Statement of Financial
    Position and Steps in Preparation
    3. Prepare the Liabilities Section

    Liabilities are categorized as current or non-current.


    Current assets and non-current assets are arranged
    by liquidity. Liquidity is the ease of converting such
    liabilities into cash.
    Elements of Statement of Financial
    Position and Steps in Preparation
    3.1. Current Liabilities

    Liabilities that fall due (paid, recognized as revenue)


    within one year after year-end date. (Notes Payable,
    Accounts Payable, Accrued Expenses (example:
    Utilities Payable), Unearned Income, etc.
    Elements of Statement of Financial
    Position and Steps in Preparation
    3.1. Non-current Liabilities

    Liabilities that do not fall due (paid, recognized as


    revenue) within one year after year-end date.
    Includes Loans Payable, Mortgage Payable, etc.
    Elements of Statement of Financial
    Position and Steps in Preparation
    4. Prepare the Owner’s Equity Section

    This section is basically lifted from the ending


    balances of accounts in the statement of changes in
    equity.
    Elements of Statement of Financial
    Position and Steps in Preparation
    5. Ensure that the Accounting Equation is Balanced

    Total assets will have to equate to total liabilities and


    equities. Furthermore, the statement is footed and
    tested of mathematical accuracy.
    Get ready for an Activity!

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