Statement of Financial Position

Statement of Financial Position


A standard company balance sheet has three parts: assets, liabilities and ownership equity. The main categories of assets are usually listed first, and typically in order of liquidity.[2] Assets are followed by the liabilities. The difference between the assets and the liabilities is known as equity or the net assets or the net worth or capital of the company and according to the accounting equation, net worth must equal assets minus liabilities.[3]




A balance sheet summarizes an organization or individual's assets, equity and liabilities at a specific point in time. Two forms of balance sheet exist. They are the report form and the account form. Individuals and small businesses tend to have simple balance sheets.[4] Larger businesses tend to have more complex balance sheets, and these are presented in the organization's annual report.[5] Large businesses also may prepare balance sheets for segments of their businesses.[6] A balance sheet is often presented alongside one for a different point in time (typically the previous year) for comparison.[7][8]

Personal balance sheet


US small business balance sheet

Sample Small Business Balance Sheet[10]
Assets Liabilities and Owners' Equity
Cash $6,600 Liabilities
Accounts Receivable $6,200 Notes Payable $5,000
Tools and equipment $25,000 Accounts Payable $25,000
Total liabilities $30,000
Owners' equity
Capital Stock $7,000
Retained Earnings $800
Total owners' equity $7,800
Total $37,800 Total $37,800


Public Business Entities balance sheet structure


Balance sheet account names and usage depend on the organization's country and the type of organization. Government organizations do not generally follow standards established for individuals or businesses.[12][13][14][15]

If applicable to the business, summary values for the following items should be included in the balance sheet:[16] Assets are all the things the business owns, this will include property, tools, cars, etc.


Current assets

  1. Cash and cash equivalents
  2. Accounts receivable
  3. Prepaid expenses for future services that will be used within a year

Non-current assets (Fixed assets)

  1. Property, plant and equipment
  2. Investment property, such as real estate held for investment purposes
  3. Intangible assets
  4. Financial assets (excluding investments accounted for using the equity method, accounts receivables, and cash and cash equivalents)
  5. Investments accounted for using the equity method
  6. Biological assets, which are living plants or animals. Bearer biological assets are plants or animals which bear agricultural produce for harvest, such as apple trees grown to produce apples and sheep raised to produce wool.[17]


See Liability (accounting)

  1. Accounts payable
  2. Provisions for warranties or court decisions
  3. Financial liabilities (excluding provisions and accounts payable), such as promissory notes and corporate bonds
  4. Liabilities and assets for current tax
  5. Deferred tax liabilities and deferred tax assets
  6. Unearned revenue for services paid for by customers but not yet provided



  1. Issued capital and reserves attributable to equity holders of the parent company (controlling interest)
  2. Non-controlling interest in equity


Regarding the items in equity section, the following disclosures are required:

  1. Numbers of shares authorized, issued and fully paid, and issued but not fully paid
  2. Par value of shares
  3. Reconciliation of shares outstanding at the beginning and the end of the period
  4. Description of rights, preferences, and restrictions of shares
  5. Treasury shares, including shares held by subsidiaries and associates
  6. Shares reserved for issuance under options and contracts
  7. A description of the nature and purpose of each reserve within owners' equity

Balance sheet substantiation






Sample balance sheet

The following balance sheet is a very brief example prepared in accordance with IFRS. It does not show all possible kinds of assets, liabilities and equity, but it shows the most usual ones. Because it shows goodwill, it could be a consolidated balance sheet. Monetary values are not shown, summary (total) rows are missing as well.

Balance Sheet of XYZ, Ltd.
 As of 31 December 2009
Current Assets
Cash and Cash Equivalents
Accounts Receivable (Debtors)
Less : Allowances for Doubtful Accounts
Prepaid Expenses
Investment Securities (Held for trading)
Other Current Assets
Non-Current Assets (Fixed Assets)
Property, Plant and Equipment (PPE)
  Less : Accumulated Depreciation
Investment Securities (Available for sale/Held-to-maturity)
Investments in Associates
Intangible Assets (Patent, Copyright, Trademark, etc.)
  Less : Accumulated Amortization
Other Non-Current Assets, e.g. Deferred Tax Assets, Lease Receivable
Current Liabilities (Creditors: amounts falling due within one year)
Accounts Payable
Current Income Tax Payable
Current portion of Loans Payable
Short-term Provisions
Other Current Liabilities, e.g. Unearned Revenue, Deposits
Non-Current Liabilities (Creditors: amounts falling due after more than one year)
Loans Payable
Issued Debt Securities, e.g. Notes/Bonds Payable
Deferred Tax Liabilities
Provisions, e.g. Pension Obligations
Other Non-Current Liabilities, e.g. Lease Obligations
Paid-in Capital
  Share Capital (Ordinary Shares, Preference Shares)
  Share Premium
  Less: Treasury Shares
Retained Earnings
Revaluation Reserve
Accumulated Other Comprehensive Income
Non-Controlling Interest

See also