Statement of Financial Position (Cambridge (CIE) O Level Accounting)
Revision Note
Written by: Donna Simpson
Reviewed by: Dan Finlay
Statement of Financial Position for Limited Companies
What is the layout of the statement of financial position of a limited company?
The statement of financial position for limited companies is mostly the same as that of a sole trader and a partnership
There is no change to the non-current assets, current assets and current liabilities sections
Any debentures and redeemable preference shares are included in the non-current liabilities
The capital section of the statement of financial position is called the equity section
The equity section includes
The share capital
Ordinary and non-redeemable preference shares
The general reserve
The retained earnings
The information for the equity section is obtained from the statement of changes in equity
Worked Example
Abrakadabra Limited prepares its financial statements to 31 March each year.
On 31 March 2024, the following balances were provided:
$ | |
Inventory | 7 080 |
Fittings at book value | 140 000 |
Trade receivables | 14 400 |
Other receivables | 18 000 |
Bank | 14 965 |
Trade payables | 8 415 |
Other payables | 6 390 |
4% Debentures (repayable 2034) | 46 000 |
Ordinary share capital | 80 000 |
Retained earnings | 25 800 |
General reserve | 2 200 |
Additional information:
$5 600 dividends were paid on ordinary shares
The profit for the year ended 31 March 2024 was $15 040
Prepare the statement of financial position at 31 March 2024 for Abrakadabra Limited.
Answer
Find the updated retained earnings:
Add the profit for the year
Subtract the dividends paid
$25 800 + $15 040 - $5 600 = $35 240
Abrakadabra Limited Statement of Financial Position at 31 March 2024 | ||
$ | $ | |
Non-current assets | ||
Fittings at book value | 140 000 | |
Current assets | ||
Inventory | 7 080 | |
Trade receiavbles | 14 400 | |
Other receivables | 1 800 | |
Bank | 14 965 | 38 245 |
Total assets | 178 245 | |
Equity and liabilities | ||
Equity | ||
Ordinary share capital | 80 000 | |
General reserve | 2 200 | |
Retained earnings | 35 240 | |
117 440 | ||
Non-current liabilities | ||
4% Debentures (repayable 2034) | 46 000 | |
Current liabilities | ||
Trade payables | 8 415 | |
Other payables | 6 390 | 14 805 |
Total equity and liabilities | 178 245 | |
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