Definition Of Statement of Financial Position

Every company must be familiar with statements of financial position, especially in every accounting cycle of a company.

This is a systematic report on the series of company financial reporting in each company’s accounting cycle.

In making a statement of financial position, there are important company data related to company transactions.

At the end of a company’s accounting cycle, this report becomes a guide that states how the company’s performance during the last period.

From this report, various data can be known, such as whether the company suffered a loss or not, which products were most favored by the market and which were not favored by the market. So that it can be an evaluation of the company.

Table of Contents

1 Definition of Statement of Financial Position
2 Components in the Statement of Financial Position
3 Forms of Statement of Financial Position
3.1 1. Control Form
3.2 2. Staffel Form
4 Example of a Statement of Financial Position
5 Try Journal Accounting Software to Make a Statement of Financial Position

Definition of Statement of Financial Position

Statements of financial position of the company ( statements of financial position) or also known as the balance sheet is a systematic report concerning the assets, liabilities and capital of a company in a certain period.

This report contains company resources or company assets, economic liabilities or debt, share capital and the relationship between these items.

In other words, this type of financial report provides an overview of the company’s financial condition.

Reading the balance sheet in a financial application should be compared with the previous period for consideration.

It can also be compared with other companies in the same industry so that there is a consideration for each other.

The statement of financial position aims to show the financial condition of a company at a certain period, usually at the time when the books are closed and the remainder is determined at the end of a fiscal year or calendar year.

In making this report there should be no errors.

Every transaction data and recorded assets must be recorded carefully so that there are no errors that result in company losses.

Statements of the company’s financial position  use the following accounting equation :

Assets (Assets) = Liabilities (Liabilities) + Equity (Equity)

Components in the Statement of Financial Position

The following are some of the components that must be present when preparing a statement of financial position:

1. Assets: Assets or assets are assets owned by the company with future useful values, such as trucks, goods cars, cargo cars, office buildings, and others that are useful for the company. These assets consist of current assets and tangible fixed assets.

2. Obligation: Liabilities or liabilities consist of current liabilities and long-term liabilities owned by a company.

3. Capital: Capital or equity is the price of company assets owned by company owners. Capital can increase or decrease at any time. It depends on the owner of the company or investors.

The above components are important for the company. Assets in the company must always be controlled and maintained so that there is no loss that must be borne by the company.

Liability should also be carefully examined. If the debt owned by the company is higher than the capital or profits, the company can go bankrupt.

So is capital. In a company, capital must always be regulated so that it can still finance the company’s needs.

Forms of Statement of Financial Position

The statement of financial position has several different forms, but the content and details in it are almost the same as each other.

You only need to adjust to the type of company transaction and how many transactions occur in your business.

This will make it easier for you to choose which form is suitable for your type of company so that the process of making a trial balance will be easier later.

1. Control Form

The balance sheet in the form of control is a form of financial statement that separates the assets in the right position from the liabilities in the left position.

If you want to create a report with a control form, then you need to separate the right and left sides.

On the right side, you can fill with capital and liability accounts. While on the left side you can fill in an account that is included in the company’s asset category.

2. Staffel Form

Staffel form is a form that is arranged lengthwise downwards and the balance is placed on the side in the debit and credit columns.

Keep in mind that the company’s assets consist of current assets and long-term assets.

Everything is entered into the column on the left side.

Current assets are company assets that can be converted into cash in one year or less.

For example, cash, marketable securities, accounts receivable, inventory materials, etc.

While long-term assets are company assets that cannot be converted into money within one year or less.

Examples are long-term investments, fixed assets, and intangible assets.

In the scoring form that you created, for the asset account, separate the two current and non-current assets.

To make it easier for you to record what assets or company assets are currently owned.

Besides being able to know more clearly what the company’s assets are, separating current and non-current assets can facilitate the process of making a company’s balance sheet. Start with the fastest liquidating current assets.

Then enter items for liability or liability and equity or equity.

Remember, you must record every detail and nothing should be missed.

Long-term debt and the amount of capital owned by the company must be recorded in nominal detail so that there are no errors in the statement of financial position.

Don’t forget to divide your obligations or liabilities into 2 parts, namely long-term liabilities and short-term liabilities.

Long-term liabilities are liabilities that mature at one point after one year.

Meanwhile, short-term liabilities are liabilities that mature within one year and are listed in order of maturity date.

By writing in detail about the company’s liabilities, you can find out how much the company is dependent on for the next year and so on.

Example of a Statement of Financial Position

After calculating using this equation, pay attention to your statement of financial position, whether it is balanced or not.

If both sides are balanced then there is no problem in this report.

But if it is not balanced, then an error occurs in the reporting process.

You have to re-examine the transactions that occurred and do a re-calculation so that the balance is balanced.

These errors can occur because of errors when entering accounts to the general ledger or from the general ledger to the statement of financial position.