Statement of Financial Position (Cambridge (CIE) O Level Accounting)
Revision Note
Written by: Donna Simpson
Reviewed by: Dan Finlay
Statement of Financial Position for Partnerships
What is the layout of the statement of financial position of a partnership?
The statement of financial position of a partnership is the same as that of a sole trader with the exception of the capital section
It first states the total assets
Non-current assets
Current assets
And then the total capital and liabilities
Capital
Non-current liabilities
Current liabilities
The capital section of the statement of financial position shows the balances of each partner from their capital accounts and current accounts separately
If the current account has a debit balance then:
Put brackets around the balance on the statement of financial position
Treat the number like a negative number
Do I need to show the full details for the current accounts?
A question might ask you to show full details of the current accounts
Start with the opening balances for each partner
Add the interest on capital
Add the salaries
Add the interest on loans
Add the profit shares
Less the drawings and the interest on drawings
Calculate the closing balances for each partner
Add together to give the combined balance for the current account
Examiner Tips and Tricks
If the question does not ask you to provide full details then you do not need to. However, if you do not have the current accounts then it might be easier to show the full details anyway.
Worked Example
Below is the capital and current account of Adi and Bilal at 31 December 2023. Prepare an extract of the statement of financial position at 31 December 2023 showing the capital section with full details of the current accounts.
Adi and Bilal Capital Accounts | |||||||
|
| Adi | Bilal |
|
| Adi | Bilal |
Date | Details | $ | $ | Date | Details | £ | £ |
|
|
|
| 2023 Jan 1 | Bal b/d | 20 000 | 12 000 |
Adi and Bilal Current Accounts | |||||||
|
| Adi | Bilal |
|
| Adi | Bilal |
Date | Details | $ | $ | Date | Details | $ | $ |
2023 |
Drawings |
3 000 |
6 000 | 2023 |
Balance b/d |
5 000 |
1 000 |
Dec 31 | Interest on drawings | 300 | 600 | Dec 31 | Interest on capital | 1 000 | 600 |
| Dec 31 | Salaries | 2 000 |
| |||
| Dec 31 | Profit share | 6 000 | 4 000 | |||
Answer
Enter the details into the layout for the statement of financial position. When we subtract the drawings and interest on drawings for Bilal we get a negative value, so we need to use brackets.
Adi and Bilal Statement of Financial Position (extract) at 31 December 2023 | |||
$ | $ | $ | |
Capital | Adi | Bilal | Total |
Capital accounts | 20 000 | 12 000 | 32 000 |
Current accounts | |||
Opening balance | 5 000 | 1 000 | |
Interest on capital | 1 000 | 600 | |
Partner's salary | 2 000 | ||
Profit share | 6 000 | 4 000 | |
14 000 | 5 600 | ||
Less: Drawings | 3 000 | 6 000 | |
Interest on drawings | 300 | 600 | |
3 300 | 6 600 | ||
10 700 | (1 000) | 9 700 | |
41 700 | |||
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