Statement of financial position
What it shows
- A statement of financial position (balance sheet) shows what a business owns and owes on one day.
- non-current assets — long-term (buildings, machines),
- current assets — short-term (inventory, money owed, cash),
- current liabilities — debts due within a year (overdraft, suppliers),
- non-current liabilities — debts due after a year (a long loan),
- owners' equity — money put in + profit kept.
Practice
Which is a non-current asset?
Non-current assets are long-term (buildings, machines); cash and inventory are current assets.
It always balances
- The two sides always balance: assets = liabilities + equity.
- Used to check what the business is worth, how much it owes, and whether it can pay its debts.
Practice
On a statement of financial position:
The two sides always balance: what the firm owns is funded by what it owes plus owners' equity.
Practice
The statement of financial position helps show whether a business can pay its debts.
It lists assets and liabilities, showing the firm's worth and its ability to pay debts.
You've got it
Key idea
- it lists non-current/current assets, current/non-current liabilities, and owners' equity
- the two sides always balance: assets = liabilities + equity
- shows what the firm is worth and whether it can pay its debts