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Statement of Financial Position (Balance Sheet)

The document defines the key elements of a balance sheet (statement of financial position) including the essential characteristics of assets and liabilities. Assets must be controlled by the entity, result from past transactions or events, provide future economic benefits, and have a reliably measurable cost. Liabilities represent a present obligation from a past transaction or event that will require an outflow of resources. The balance sheet presents current and non-current assets and liabilities in order of liquidity according to accounting standards. It is prepared using general ledger account balances after all adjusting entries have been made.

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35 views10 pages

Statement of Financial Position (Balance Sheet)

The document defines the key elements of a balance sheet (statement of financial position) including the essential characteristics of assets and liabilities. Assets must be controlled by the entity, result from past transactions or events, provide future economic benefits, and have a reliably measurable cost. Liabilities represent a present obligation from a past transaction or event that will require an outflow of resources. The balance sheet presents current and non-current assets and liabilities in order of liquidity according to accounting standards. It is prepared using general ledger account balances after all adjusting entries have been made.

Uploaded by

joann121887
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PPTX, PDF, TXT or read online on Scribd
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STATEMENT OF FINANCIAL POSITION

(BALANCE SHEET)
ELEMENTS OF BALANCE SHEET
(STATEMENT OF FINANCIAL POSITION)
ESSENTIAL CHARACTERISTICS OF AN ASSET:
1. The asset is controlled by the entity
2. The asset is the result of a past
transaction or event.
3. The asset provides future economic
benefits.
4. The cost of the asset can be measured
reliably.
ESSENTIAL CHARACTERISTICS OF A LIABILITY:
1. The liability is the present obligation of a
particular entity.
2. The liability arises from past transaction
or event.
3. The settlement of a liability requires an
outflow of resources embodying economic
benefits.
PRESENTATION OF BALANCE SHEET
PAS 1 par.60
1. An entity shall present current and
noncurrent assets and current and
noncurrent liabilities, as separate
classifications in the Statement of Financial
Position
2. An entity shall present all assets &
liabilities in the order of liquidity
PREPARING THE BALANCE SHEET
Considerations:
prepared after all adjusting entries are
made in the general journal
all journal entries have been posted to
the general ledger
the general ledger accounts have been
footed to arrive at the period end totals
and an adjusted trial balance is prepared
from the general ledger amounts
CLASSIFICATION OF ACCOUNTS
SAMPLE CHART OF
ACCOUNTS
EXAMPLE:

Report Form
EXAMPLE:

Account Form

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