9/16/2023

Financial Statements –
Statement of Financial Position

Minoli Jayasekera MBA (PIM-SJP), B.Sc. (Acct.) Hons., ACA, ACMA (UK), CGMA (UK), ACMA (SL)
077 984 8414 minoli.jayasekera@gmail.com 1
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Statement of Financial Position

A summary of an Entity’s
Assets, Liabilities and Equity
at a specific point in time
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Simple Structure of
Statement of Financial Position

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Total Equity
Total Assets
Total Liabilities

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Statement of Financial Position

and
Accounting Equation
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Statement of Financial Position

(Balance Sheet)
is a detailed reflection of the
Accounting Equation

Balance Sheet is always in balance

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Current/ Non-current Distinction

If an asset gets realized or liability gets settled
within 12 months after the reporting date

More than 12 months

Current Non-current
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Examples of Current Assets

Cash in hand Trade Receivables
Cash at bank Prepaid expenses
Treasury Bills Advances Paid
Inventory 3-Month FD
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Examples of Non-Current Assets

Land and Building Leased Properties
Plant and Machinery Goodwill
Motor Vehicles Software
Furniture 5-Year FD
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Examples of Current Liabilities

Bank Overdrafts Advances Received

Trade Payables Accrued Payables

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Examples of Non-Current Liabilities

Bank Loans
Debentures

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Detailed Structure of
Statement of Financial Position

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ABC PLC
Statement of Financial Position
As at 31st March 20X3
Notes Rs. Rs.
Assets
Non-current Assets
Property, Plant and Equipment 07 XX
Intangible Assets XX
Investments in Associates XX
Other Financial Assets XX XX
Current Assets
Inventory 08 XX
Trade Receivable 09 XX
Other Current Assets XX
Cash and Cash Equivalents 10 XX XX
Total Assets Confidential XXX

Notes Rs. Rs.

Equity
Stated Capital XX
Retained Earnings XX
Revaluation Reserves XX XX
Non-current Liabilities
Other Financial Liabilities XX
Interest bearing Borrowings 11 XX
Preference Shares XX XX
Current Liabilities
Trade Payable XX
Accrued Expenses XX
Current portion of Interest bearing Borrowings 11 XX XX
Total Equity and Liabilities XXX
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General Notes on
Statement of Financial Position

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07. Property, Plant & Equipment

Land Building Machinery Motor Vehicles Furniture Total
Cost/ Revalued Amount
Balance as at 01.04.20X2 XX XX XX XX XX XXX
Additions XX XX XXX
Revaluation XX XXX
Disposals (X) (X)
Balance as at 31.03.20X3 XX XX XX XX XX XXX
Depreciations
Balance as at 01.04.20X2 XX XX XX XX XX XXX
Depreciation charge for the year XX XX XX XX XXX
Revaluation
Disposals (X) (X)
Balance as at 31.03.20X3 XX XX XX XX XX XXX
Carrying Amount XX XX XX XX XX XXX
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08. Inventories Rs. 10. Cash and Cash Equivalents Rs.

Raw Material XX Short-term Investments XX

Work-in-progress XX Bank balance XX
Finished Goods XX Cash in hand XX
XX XX

11. Interest bearing Borrowings Rs.

09. Trade Receivable Rs.
Balance as at 01.04.20X2 XX
Trade Debtors XX Loans Obtained XX
(-) Provision for Debtor Impairment XX Accrued Interest XX
XX Repayments (XX)
Balance as at 31.03.20X3 XX
Amounts payable within 12 months XX
Amounts payable after 12 months XX
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Understanding a
Statement of Financial Position
of a PLC

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Question 1
The following balances were extracted from the books of M&S PLC as at 31st March 2023:
(Rs.) Dr. Cr.
Cash 10,000
Trade Receivables 20,000
Inventory 14,000
Prepaid Expenses 3,000
Property, Plant & Equipment 35,000
Accumulated Depreciation 2,000
Trade Payables 5,000
Accrued Expenses 6,000
Short-term Investments 7,000
Long-term Investments 10,000
Stated Capital 40,000
Retained Earnings 12,000
Interest bearing Borrowings 20,000
Debentures 14,000 22
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Question 1
Consider 20% of Interest bearing Borrowings as payable within 1 year.

You are required to:

Prepare the Statement of Financial Position as at 31st March 2023.

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Question 2
The following balances were extracted from the books of Diana PLC as at 31st December 2022.
(Rs.) Dr. Cr.
Stated Capital 360,000
Trade Receivables 32,000
Land 400,000
Building 450,000
Long term Loan 300,000
Trade Payables 15,000
Bank Overdraft 5,800
Accumulated Depreciation 12,500
Cash 30,000
Inventory 51,000
Retained Earnings 269,700
963,000 963,000
You are required to:
Prepare the Statement of Financial Position as at 31st December 2022.
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MCQs

1. On the Balance Sheet, accrued expenses, trade payables and bank overdraft are listed
under which category?
a) Current Liabilities
b) Accrued Payables
c) Non-current Liabilities
d) All of the above

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2. Inventories, Cash and Cash Equivalents and Trade Receivables are listed as,
a) Earnings on Income Statement
b) Payments on Income Statement
c) Assets on the Balance Sheet
d) Liabilities on the Balance Sheet
3. Which of the following is not a Current Asset?
a) Trade Creditors
b) Treasury Bills
c) Trade Debtors
d) Prepaid Insurance
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4. Which Financial Statement’s structure is closest to that of the basic accounting equation?
a) Balance Sheet
b) Income Statement
c) Statement of Cash Flows
d) Statement of Other Comprehensive Income

5. The term ‘Current Assets’ does not include,

a) Debtors
b) Car
c) Inventories
d) Prepayments
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6. Which of the following is not an Intangible Asset?
a) Land
b) Goodwill
c) Software
d) Patents

7. The receipt of cash from a customer for a consultancy service to be provided in the next
accounting period is record as,
a) Equity
b) A Liability
c) An Asset
d) An Income Confidential
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MCQs

Assets and Liabilities of Bernard PLC are as follows:

Machinery Rs. 20,000 8. What is the Total Equity of Bernard PLC?

Cash in hand Rs. 2,000
a) Rs. 55,000
Land & Buildings Rs. 200,000
b) Rs. 177,000
Bank Loan Rs. 50,000
Creditors Rs. 5,000 c) Rs. 232,000
Debtors Rs. 10,000 d) Rs. 287,000

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XYZ PLC had the following figures in 9. Total Current Assets of XYZ PLC,
its Balance Sheet: a) Rs. 60,000/-
Building Rs. 100,000 b) Rs. 80,000/-
Debtors Rs. 10,000 c) Rs. 120,000/-
Cash Rs. 5,000 d) Rs. 200,000/-
Furniture Rs. 20,000
Inventories Rs. 10,000
10. Total Liabilities of XYZ PLC,
Bank Rs. 55,000
a) Rs. 5,000/-
Shareholders’ Funds Rs. 100,000
b) Rs. 95,000/-
Bank Loan Rs. 95,000
Creditors Rs. 5,000 c) Rs. 100,000/-
d) Rs. 200,000/-
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Thank You

Minoli Jayasekera MBA (PIM-SJP), B.Sc. (Acct.) Hons., ACA, ACMA (UK), CGMA (UK), ACMA (SL)
077 984 8414 minoli.jayasekera@gmail.com 31
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