Chapter 1:

STATEMENT OF FINANCIAL
POSITION

Group 1
Statement of Financial Position
- Also known as balance sheet. This
statement includes the amount of the
company's total assets, liabilities and
owner's equity which in totality
provides the conditions of the
company on a specific date.(Haddock,
Price and Farina, 2012)
Permanent Accounts
- As the name suggests, these
accounts are permanent in a sense that
their balances are remain intact from
one accounting period to another.
Basically, assets, liabilities, and equity
accounts are permanent accounts.
 Contra Assets
- Contra assets are those accounts that are
presented under the assets portion of the SFP
but are reductions to the company's assets.
These include Allowance for Doubtful Accounts
and Accumulated Depreciation. Allowance for
Doubtful Accounts is a contra assets to Accounts
Receivable. Accumulated Depreciation is a contra
asset to the company's property, plant and
equipment.
Report Form
- A form of SFP that shows assets
accounts first and then liabilities and
owner's equity accounts after.

Account Form
- A form of the SFP that shows assets on
the left side and liabilities and owner's equity
on the right side just like the debit and credit
balances of an account.
Current Assets
- Assets that can be realized (collected,
sold, used up) one year after year-end
date.

Current Liabilities
- Liabilities that fall due (paid,
recognized as revenue) within one year
after year-end date.
 Noncurrent Assets
- Assets that cannot be realized (collected,
sold, used up) one year after year-end date.

Noncurrent Liabilities
- Liabilities that do not fall due (paid,
recognized as revenue) within one year
after year-end date.
Difference of the Statement of Financial Position of
a Service Company and of a Merchandising Company
- The main difference of the Statement of the
two types of business lies on the inventory
account. A service company has supplies
inventory classified under the current assets of
the company. While a merchandising company
also has a supplies inventory classified under the
current assets of the company, the business has
another inventory account under its current
assets which is the merchandise inventory,
ending.
The parts of the Statement of Finacial Position are:
Assets- are resources that the company can use to
create goods or provide services and generate
revenues.

Liabilities- are debt obligations that the company

owes other companies, individuals, or institutions.

Equity- Consists of the ownership of the company.

In other words, this measures their stake in the
company and how much the shareholders or partners
actually own.