Glossary · Also called Balance sheet
Statement of financial position
A snapshot of what the business owns and owes at a single date.
What it means
A financial statement listing the assets, liabilities and capital of a business at a specific date; it is the accounting equation set out formally.
Example
It shows non-current and current assets balanced against capital and liabilities at the year end.
Why it matters
It answers 'what does the business own and owe right now?' and always balances.
In practice
The statement of financial position is prepared at one date, the reporting date. It lists non-current and current assets, then capital adjusted for profit and drawings, then non-current and current liabilities. Total assets equal capital plus liabilities, in line with the accounting equation. For instance, assets of RM40,000 might be financed by capital of RM28,000 and liabilities of RM12,000.
Its balances are the asset, capital and liability accounts carried forward in the ledger after the income statement accounts are closed.
Students often confuse it with the income statement. This statement is a snapshot of position at a date. The income statement measures performance across a whole period, using revenue and expenses.
Because it is a snapshot, it changes with the next transaction. A sale made the following morning would change cash, receivables and, through profit, capital.
If you lose marks on the layout or the order of items, one of our teachers can check your past-paper statements with you line by line. Book a trial class.
Related terms
Syllabus reference: Cambridge 0452 and 0985, syllabus for 2027 to 2029, sub-topic 5.1 Sole traders (page 15).
Definitions here are general accounting explanations for study. For your board's exact wording, see its official syllabus via Sources.
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