The Main Features of a Statement of Financial Position (Cambridge (CIE) O Level Business Studies)

The Statement of Financial Position shows the financial structure of a business at a specific point in time

It identifies a businesses assets and liabilities and specifies the capital (equity) used to fund the business operations

The Statement of Financial Position is also known as the Balance Sheet

• It is called the balance sheet as the net assets are equal to the total equity

Assets are items owned by a business

• Non-Current Assets are owned by a business in the long-term

  • Examples include tangible assets such as buildings, land, machinery and vehicles

  • Non-current assets may be intangible, such as patents, goodwill or  brand value 

• Current Assets include cash and items that can be turned into cash relatively quickly, usually within 12 months

  • The four types of current assets are cash in hand, cash in bank, debtors (trade receivables) and inventory (stock)

Liabilities are amounts of money owed by a business (debts) 

• Non-current liabilities are amounts owed that do not need to be paid back for at least 12 months

  • E.g. Long-term loans such as mortgages

• Current liabilities are amounts owed that must be repaid within 12 months

  • E.g.Creditors (trade payables) and bank overdrafts