Statement of Financial Position
A Statement of Financial Position is a report to
show what the business is worth to the owner. Doing
the Statement of Financial Position is almost the
same as an income statment except you are doing
assets minus liabilities to get the net assets which
is also the capital. Classify to either assets or
liabilities. Put down all the assets on the sheet
and add it all up to get the total amount of assets.
Do the exact same thing you just did with the assets
except do it with the liabilities. Subtract the
liabilities from the assets to get the net assets and
capital.
- Assets
- Liabilities
- Net Assets/Capital
Trial Balance
A Trial Balance is just an income statement and statement
of financial position with a little bit extra at the end.
It will give you a trial balance with assets and expenses
on the left and liabilities and revenue on the right.
There will be capital and drawings on the trial balance
its important you put a * next to it and don't classify it
because you will need it for the end. Start by classifying
everything either as an asset, liability, expense or revenue.
Then do the income statement like you normally would and the
statement of financial position. At the end of the statement
of financial position there will be owner’s equity and say
something like opening capital you will need to put the capital
from the trial balance and add the capital to the profit from
the income statement. You will get a total and now you need the
drawings. Your total minus drawings should equal the net assets
if it's not the same you have probably done something wrong. The
net assets and closing capital must be the same or it's wrong.
- Drawings
- Capital
- Balance