Introduction:
The Statement of Financial Position depicts the financial position of an entity at a point in time. It is also known as the balance sheet. It lists an entity’s assets, liabilities, and equity at a specific date. You will learn about three accounting elements; assets, liabilities and equity. Assets are items that an entity owns/controls, liabilities are items that an entity owes and equity is internal claims to those items. We will be exploring the definition and recognition of these three elements. We will explain the accounting equation process of the double-entry system of recording, including the concept of duality.
The purpose of this module is to examine in more detail the nature and purpose of the statement of financial position. Potential limitations of the statement of financial position will also be discussed.