A statement of financial position is one of the sets of financial statements that are required to be prepared and presented to users according to the International Financial Reporting Standards (IFRS). It is also referred to as a balance sheet in the old standard.
Definition of Statement of Financial Position
A statement of financial position is a statement that shows the financial position of a business at the end of a particular period.
What to note
What is meant by financial position, refers to the position of the Assets, Liabilities, and Capital of the business concern. The business resources, Assets are put into use to generate income for the business. The income is used to pay interest and principal to the providers of debts (liabilities) and dividends to the provider of capital.
The financial position reflected changes that occur during the accounting period under consideration of assets, liabilities, and capital.
Format of a statement of financial position
A specimen of a statement of the financial position of Dangote Cement is shown below.
You will notice from the 2018 statement of the financial position of Dangote Cement is called “consolidated financial position.” This is a term used for a company that is a parent company and has other children companies referred to as subsidiaries.
The statement is further subdivided. The Assets and liabilities are subdivided into non-current and current. The capital is referred to as equity. Generally, Assets minus Liabilities equals Capital/Equity.