Page 150 - Book-keeping for Secondary Schools Student’s Book Form One

Book-Keeping for Secondary Schools

Activity 7.1 The statement of financial position of the
enterprise shows the relationship between

Use online reliable sources to search assets, liabilities and capital. You will
any three financial statements of recall that, the basic accounting equation
states that assets are equal to liabilities
businesses in Tanzania. Study the plus capital. The statement of financial
FOR ONLINE READING ONLY
financial statements focusing on position, therefore, aims at showing how
sales, net sales, cost of goods sold, this equation stands at the end of the

and profits. Then, prepare a list accounting period, considering in each of
showing different persons who might these elements. The statement of financial
be interested in the information position is referred to as such because it
shows the assets of the enterprise and
presented in an income statement. how such assets have been financed that
Write in summary, explanations is proportions of liabilities and capital.
of what you have understood by

focusing on the information studied Preparing a statement of financial
from the financial statements of the position
When preparing a statement of financial
businesses and why the persons position, the value of each category of
you have listed might be interested assets and liabilities is usually taken from
with information presented on the the general ledger balances. To make it
financial statements. easy for the users to understand well the
financial position of the business, there
is an orderly system used in presenting
A statement of financial position assets and liabilities, rather than listing
Unlike the income statement that reports them randomly. The common methods

a financial performance (profit or loss) used in presenting assets and liabilities
for a period, a statement of financial are explained in the following sections.
position shows the financial position of an Approaches of presenting assets and

enterprise at a specific date. The specific liabilities
date is the end of the accounting period. There are two approaches that are
The statement of a financial position commonly used to present assets and

is therefore prepared by enterprises to liabilities in the statement of financial
position. The methods are such that the
present its financial position as at the date assets and liabilities are listed according
indicated on that statement. to the length of time taken to pay the
debts (in case of liabilities) or, in case
of an asset, the length of time it will take

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Student’s Book Form One

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