Statement of financial position format

The standard format

1. Non-current assets (at carrying amount)
2. Current assets
3. Total assets
4. Capital (opening + profit − drawings)
5. Non-current liabilities
6. Current liabilities
7. Total capital and liabilities

Filled example

Notes

• Show non-current assets at cost less accumulated depreciation (carrying amount).
• Capital = opening capital + profit for the year − drawings.
• Total assets must equal total capital and liabilities.

Building and reading this format

The statement of financial position shows one idea: what the business owns equals what it owes plus what the owner has put in. Everything on the page is arranged to prove that balance. It has three blocks.

What does the business control (assets)? What must it repay (liabilities)? What is left for the owner (capital)?

Start with non-current assets. These are items kept for long-term use, such as premises, equipment and vehicles.

Show them at cost less accumulated depreciation, which gives the carrying amount (net book value). List the most durable first.

Next come current assets, which should turn into cash within a year. List them from least to most liquid: inventory, then trade receivables, then cash and bank. Listing cash first is a frequent presentation error.

Then deduct current liabilities, which are debts due within a year, such as trade payables and a bank overdraft. The result is net current assets (working capital). It shows whether the business can pay its short-term debts from its short-term resources.

Add it to non-current assets, then subtract non-current liabilities such as a long-term loan. The answer is net assets, and it must equal the capital section beneath it.

The capital section shows opening capital, plus profit for the year, less drawings, which gives closing capital. If profit is RM14,000 and drawings are RM9,000, capital grows by RM5,000. The owner took out less than the business earned.

Net current assets also tell a story. Current assets of RM40,000 and current liabilities of RM25,000 give working capital of RM15,000, which looks comfortable. An overdraft that pushes current liabilities above current assets signals strain.

Section errors cost the most marks. A long-term loan placed among current liabilities understates net current assets. Drawings put among expenses, instead of deducted in the capital section, are counted twice.

Leaving out the net current assets subtotal, or not showing accumulated depreciation as a deduction from cost, removes what the marker looks for. The heading must say "as at" a single date, because this statement is a snapshot, not a period.

Use inner and outer money columns so cost, depreciation and carrying amount line up. Underline each subtotal and double-underline the two totals that must agree.

If your statement never quite balances, a teacher can sit with you and trace the missing figure step by step. Book a trial class

Related how-to

• How to prepare a statement of financial position

These formats are standard accounting practice with our own figures. Check your board's exact requirements on the exam boards page.