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Statement of financial position for a sole trader

Edexcel IAL Accounting · WAC11 The Accounting System and Costing

The statement of financial position lists assets, capital and liabilities at the end of the year. It is the accounting equation set out in full (spec 1.3.2).

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Structure (as Pearson mark schemes lay it out)

Non-current assets: columns for cost, accumulated depreciation and carrying value.
Current assets in order of liquidity: inventory, trade receivables (less allowance), other receivables (prepayments, accrued income), bank, cash.
TOTAL ASSETS.
Capital: capital at start + profit for the year (or - loss) + capital introduced - drawings.
Non-current liabilities: amounts due after more than 12 months, such as a long-term bank loan.
Current liabilities: trade payables, other payables (accrued expenses, income in advance), bank overdraft, loan repayments due within 12 months.
TOTAL CAPITAL AND LIABILITIES, which equals total assets.

Worked layout

	£	£	£
Non-current assets	Cost	Accumulated depreciation	Carrying value
Premises	120,000	0	120,000
Fixtures and fittings	30,000	12,000	18,000
Motor vehicles	26,000	9,500	16,500
	176,000	21,500	154,500
Current assets
Inventory		16,800
Trade receivables less allowance (12,400 - 620)		11,780
Other receivables		700
Bank		5,300
Cash		400
			34,980
TOTAL ASSETS			189,480
Capital at start			135,300
Add Profit for the year			37,800
Less Drawings			(24,000)
			149,100
Non-current liabilities: Bank loan (repayable 2031)			30,000
Current liabilities
Trade payables		9,200
Other payables		1,180
			10,380
TOTAL CAPITAL AND LIABILITIES			189,480

Statement of financial position at 31 March 2026

Classification checks

A bank overdraft is a current liability; the 2024 examiners' report noted that leaving it out of current liabilities wrecked candidates' liquidity ratios.
The part of a loan repayable within a year is a current liability; the rest is non-current.
Prepayments are current assets; accruals are current liabilities.
Closing inventory from the statement of profit or loss is the current asset figure.

Worked example

Find the owner's capital at the end of the year from the statement above.

Total assets = 154,500 + 34,980 = 189,480.
Liabilities = 30,000 + 10,380 = 40,380.
Closing capital = 189,480 - 40,380 = 149,100, which equals 135,300 + 37,800 - 24,000.

Answer: Closing capital £149,100.

Key idea: Total assets = capital + liabilities. Closing capital = opening capital + profit + capital introduced - drawings.

Check yourself

Capital at start £64,000; profit for the year £21,500; capital introduced £5,000; drawings £17,200. Calculate closing capital.
Show answer
£73300. 64,000 + 21,500 + 5,000 - 17,200 = 73,300.
Inventory £8,200; trade receivables £6,500 with an allowance of £325; prepaid rent £400; cash £150; bank overdraft £2,100. Calculate total current assets.
Show answer
£14925. 8,200 + 6,175 + 400 + 150 = 14,925. The overdraft is a current liability.
Equipment cost £45,000 with accumulated depreciation of £18,900. What is its carrying value?
Show answer
£26100. 45,000 - 18,900 = 26,100.
How is a bank overdraft classified?
- Current asset
- Non-current liability
- Deduction from capital
- Current liability
Show answer
Current liability. An overdraft is repayable on demand.
A bank loan of £40,000 is repayable in equal annual instalments of £8,000. How is it shown at the year end?
- £40,000 non-current liability
- £8,000 current liability and £32,000 non-current liability
- £40,000 current liability
- £32,000 current liability and £8,000 non-current liability
Show answer
£8,000 current liability and £32,000 non-current liability. The instalment due within 12 months is current; the rest is non-current.
Total assets are £182,000. Non-current liabilities are £25,000 and current liabilities £14,600. Calculate the owner's capital.
Show answer
£142400. 182,000 - 25,000 - 14,600 = 142,400.

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Sources

Pearson Edexcel International Advanced Subsidiary/Advanced Level in Accounting specification (issue 2), Unit 1 and Appendices 6 to 8

Last updated 8 November 2026. Spotted a mistake? Tell us.