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    FABM2 1st Half of 1st Quarter Reviewer ACRS

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    Afeiyha Czarina Santiago

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    FABM2 1st Half of 1st Quarter Reviewer ACRS

    Uploaded by

    Afeiyha Czarina Santiago
    23 views2 pages

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    © © All Rights Reserved

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    © All Rights Reserved
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    23 views2 pages

    FABM2 1st Half of 1st Quarter Reviewer ACRS

    Uploaded by

    Afeiyha Czarina Santiago

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    of 2

    FUNDAMENTALS OF ACCOUNTANCY, BUSINESS AND MANAGEMENT 2

    FIRST HALF OF FIRST QUARTER REVIEWER

    STATEMENT OF FINANCIAL POSITION


     Known as the “Balance Sheet”.
     Presents the financial position of an entity at a given date.
     Three main components: assets, liabilities and equity.
     It helps the users of financial statements to assess the financial health or soundness of an entity.
     It is helpful particularly in determining the state of entity’s :
    Liquidity Risk- if the company can cover all the total current liabilities within a year
    Financial Risk- losing a money from an investment
    Credit Risk- when borrower/s may not repay their loan on time
    Business Risk- anything that threatens a company’s ability to achieve its financial goals (e.g.
    bankruptcy)
     It may help to identify relationships and trends which are indicative of potential problems/areas
    for further improvement.
     It has the “as of” header only.

    ELEMENT OF STATEMENT OF FINANCIAL POSITION


    1. ASSETS - It is an entity owns or control. A= L-E
    Current Assets- Expected to be realized within one year.
    Non-Current Assets- Deliver economic benefits to the entity over the long term/ more than a
    year.
    2. LIABILITIES - It is an obligation that a business owes to someone. L= A-E
    Current Liabilities- Expected to be settled within a year.
    Non-Current Liabilities- To be settled over the long term.
    3. EQUITY- It is what business owes to its owners. E= A-L

    CLASSIFICATION OF ASSETS
     Current Assets
    Cash- readily converted within a year and can pay short-term dept.
    Accounts Receivable- Cash to be collected within one year.
    Inventory- Includes raw materials and finished goods that are readily available for sale.
     Non-Current Assets
    Fixed Assets- Includes property, plants and equipment that are not expected to be converted
    into cash within a year.
    Intangible Assets- these are nonphysical assets, such as patents and copyrights.
    Long-term Investments- such bonds and notes.
     REMEMBER:
    Order of Liquidity- the presentation of assets in the balance sheet
    1. Cash and Cash Equivalents
    2. Marketable Securities
    3. Accounts Receivable
    4. Inventory
    5. Prepaid Expenses
    6. Fixed Assets
    7. Goodwill

    CLASSIFICATION OF LIABILITIES
     Current Liabilities
    Accounts payable, notes payable, and unearned income, wages payable, and taxes payable.
     Non-Current Liabilities
    Long-Term Bank Loan, bonds payable, Mortgage Payable
    CATEGORIES OF EQUITY
     Sole Proprietorship- Owners Equity, net of withdrawal.
    e.g. SANTIAGO, Capital

     Partnership- Partner’s Equity, net of partners’ withdrawal and share in net income (net loss).
    e.g. JONGSEONG, Capital
    PARK, Capital
    JAY, Capital
     Corporation
    Share Capital- represents the amount invested by the owners in the entity.
    Retained Earnings- comprises the total net profit/loss retained in the business after distribution
    to the owners in the form of dividends.
    Revaluation Reserve- contains the net surplus, of any upward revaluation of the property, plant
    and equipment recognized directly in equity.

    STEPS IN PREPARING A SIMPLE STATEMENT OF FINANCIAL POSITION (SINGLE PROPRIETORSHIP)


    1. Start with a heading. It includes the name of entity, name of the statement, and the reporting
    period.
    2. Present the assets. Classify the assets into current and non-current.
    3. Present the liabilities. Should be classified into current and non-current.
    4. Add the owner’s equity. There is a need to add the owner’s equity to the “liabilities and equity”
    section.

    FORMS OF THE STATEMENT OF FINANCIAL POSITION


     Account Form- It gives information in an essentially horizontal format. This form consists of two
    columns, set side by side. The left lists the company’s asset while the right column lists both
    liabilities and equity.
     Report Form- It provides the information in vertical format- essentially one column that goes the
    full width of the page.

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