The statement of financial position is a financial term used to determine the balance sheet, where the report includes the condition of assets, liabilities and capital at a certain time. The information in this report can be utilized for various financial analysis.
The statement of financial position can be interpreted as a summary of the condition of the company’s assets, liabilities and capital. In addition, the statement of financial position is often referred to as a balance sheet.
This report can be used by companies to find out the company’s financial condition in a certain period. In addition, it can also be used as a basis for determining company policies.
There are 2 formats that can be used in compiling reports, namely staff format and control format. Even though there are 2 formats to choose from, in compiling the report the main calculation principles are still adhered to, namely total assets must be equal to the sum of total liabilities plus total capital (equity).
When described in the form of a formula it will look like the following:
- Assets = Liabilities + Equity
1. Staffel format
Reports in staffel form are reports that are presented in a vertical form. Where for the asset post will be reported at the top. Then followed by liability and capital items under it, sequentially.
2. Control Format
Reports in skontro form are different from staffel formats. In skontro format, reports are presented side-by-side. Where the asset post will be placed in the left position, while the liability and capital posts will be placed in the right position. Then the total in the left position must be ensured to be the same as the total in the right position.
Components of Statement of Financial Position
In making a report, you need to know the components that must be in it. As previously mentioned, the statement of financial position has 3 components, namely:
Assets are usually known as assets or assets of the company. There are 2 types of assets, namely current assets and non-current assets. Current assets consist of cash and cash equivalents, inventories, receivables, current investments, prepaid income, etc.
Non-current assets consist of long-term investments, fixed assets, intangible assets, equity investments, deferred expenses, etc.
Liabilities are debts that are borne by the company, both short-term debt and long-term debt. Short-term debts include, bank loans that are no more than 1 year old, taxes payable, sales advances, financing debts, etc.
Long-term debt includes, finance lease debt, as well as other long-term debt that is more than 1 year.
Capital or equity is the capital used by the company to carry out operational activities. Included in the capital component include paid-up capital, retained earnings, share capital, etc.
How to Make a Statement of Financial Position
In general, how to make a statement of financial position include the following:
- Identify and analyze the company’s financial transactions
- Record and classify the company’s financial transaction journal
- Transferring or posting the results of recording journals to the ledger
- Prepare a trial balance based on the existing ledger
- Arrange column worksheets based on the ledger
- Create reports based on column worksheets
In accounting there are various types of financial statements, one of which is the statement of financial position or what is commonly called a balance sheet.
In making a report, it is necessary to pay attention to several formats and components that have been mentioned previously.
In addition, it is also necessary to pay attention to the methods or steps in the manufacturing process, so that the reports presented can be valid and display reports that are balanced between the debit side and the credit side.
Hopefully the above information can help you know how to prepare a statement of financial position properly and correctly.
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