Statement of financial position
Assets, liabilities and capital at a date, laid out so the two halves agree.
ACCA exams this helps with: FA Financial Accounting FR Financial Reporting See the ACCA map
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What it is: A statement that lists what the business owns (assets), what it owes (liabilities) and the owner’s share (capital) on one date.
How it is laid out: Non-current assets, then current assets. Take away current and non-current liabilities. The answer is net assets. Below that, the capital section shows how the owner’s share is made up. The two totals must be the same.
Important: It shows one date only, such as “as at 31 December”. It is the accounting equation written out in full.
Example. On 31 December a business owns equipment and cash worth £30,000 and owes £10,000. Net assets = £30,000 − £10,000 = £20,000. The capital section also totals £20,000.
Key words
- Current
- Expected to be turned into cash, used up or paid within 12 months of the year end.Example: Stock and money owed by customers are current assets. A supplier bill due next month is a current liability.
- Non-current
- Expected to be kept, used or owed for more than 12 months after the year end.Example: A delivery van is a non-current asset. A bank loan repayable in 5 years is a non-current liability.
- Net assets
- Total assets minus total liabilities. It equals the owner’s equity.Example: Assets £12,500 − liabilities £900 = net assets £11,600.
- Drawings
- Money or goods the owner of a business takes out for their own personal use. Drawings reduce the owner’s capital. They are not a business expense.Example: A sole trader takes £200 from the till to buy personal shopping. That is £200 of drawings.
- Retained earnings
- The total profits a company has made over its life and kept in the business, instead of paying them out as dividends.Example: Retained earnings of £12,000 in the statement of financial position.
Learn
The statement of financial position (also called the balance sheet) shows what the business owns and owes on one date. Its heading says as at, for example “as at 31 December 2025”.
Current or non-current?
Current means it will be turned into cash, or paid, within 12 months of the balance sheet date. Everything else is non-current.
Example: A loan repayable in 3 years is non-current. A supplier bill due next month is current.
| Section | Examples |
|---|---|
| Non-current assets | Land and buildings, equipment, vehicles (shown at net book value) |
| Current assets | Inventory, trade receivables, prepayments, cash |
| Current liabilities | Trade payables, accruals, overdraft, tax to pay |
| Non-current liabilities | Loans repayable after more than 12 months |
Sole trader layout
These two figures must be the same. Example: Opening capital £20,000 + Profit £9,000 − Drawings £6,000 = £23,000. Net assets must also be £23,000.
Company layout (IAS 1)
List the assets first: non-current, then current, then total assets. Then list equity and liabilities: share capital, retained earnings, non-current liabilities, current liabilities. The final total must equal total assets.
Watch it explained
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Videos from YouTube tutors
These videos are made by independent tutors on YouTube, not by Trial Balance. They may use slightly different terms, for example “owner’s equity” instead of “capital”.
Worked example
| £ | £ | |
| Assets | ||
| Non-current assets | ||
| Property, plant and equipment | 30,000 | |
| Current assets | ||
| Inventories | 7,000 | |
| Trade receivables | 4,000 | |
| Cash and cash equivalents | 2,000 | |
| 13,000 | ||
| Total assets | 43,000 | |
| Equity and liabilities | ||
| Equity | ||
| Share capital | 20,000 | |
| Retained earnings | 9,000 | |
| Total equity | 29,000 | |
| Non-current liabilities | ||
| Bank loan | 10,000 | |
| Current liabilities | ||
| Trade payables | 4,000 | |
| Total equity and liabilities | 43,000 | |
Practice questions
Type or choose your answers, then press Check answer. Questions with a New numbers button can be repeated with different figures.