Purposes of the Statement of Financial Position

Question 1

What is the purpose of the Statement of Financial Position?

Answer 1

Achieved: To measure Assets, Liabilities and Equity at one point in time for the (insert name of the Business here).
Merit: This allows (insert the user name here) to make decisions about (make up a decision relating to Assets, Liabilities or Equity related to the question).

Question 2

What are the components of the Statement of Financial Position?

Answer 2

Current Assets
Non Current Assets
Plant Property Equipment
Investments
Intangible Assets
Current Liabilities
Non Current Liabilities
Owners Equity

Question 3

What are the limitations of the Statement of Financial Position?

Answer 3

Assets value are recorded at Historical Cost so market valuation may have changed and the asset maybe either under or over stated.
Accumulated Depreciation and Allowance for Doubtful Debts are based on estimates.
Does not show non-financial information. E.g. the quality and age of assets, the ability of staff.