Statement of financial position for a limited company

IAS 1 layout

Assets

• Non-current assets: property, plant and equipment (at carrying amount), intangible assets such as goodwill
• Current assets: inventories, trade and other receivables (including prepayments), cash and cash equivalents
• Total assets

Equity and liabilities

• Equity: share capital, share premium, revaluation reserve, general reserve, retained earnings
• Non-current liabilities: debentures, bank loans repayable after more than 12 months
• Current liabilities: trade and other payables (including accruals), tax payable, bank overdraft, the part of any loan due within 12 months
• Total equity and liabilities = total assets.

Where the adjustments land

• Accrued expenses and accrued debenture interest: other payables (current liabilities).
• Prepayments: other receivables (current assets).
• The tax charge for the year is usually unpaid at the year end: current liability.
• Equity figures are the closing balances from the statement of changes in equity.
• A proposed final dividend is not a liability.

Worked statement

Harbour Lights plc at 31 March (equity from the statement of changes in equity):

Statement of financial position

Worked example

The trial balance shows debenture interest paid £40,000 on £1,000,000 of 8% debentures and office expenses with £6,000 owing. How much appears as other payables?

1. Full-year debenture interest = 8% x 1,000,000 = £80,000; paid £40,000, so £40,000 accrued
2. Office expenses accrued £6,000
3. Other payables = 40,000 + 6,000

Answer: £46,000

Check yourself

1. Share capital £3,000,000, share premium £450,000, general reserve £200,000, retained earnings £1,350,000. Calculate total equity.
   Show answer

   £5000000. Sum = £5,000,000.

2. Inventories £260,000, trade receivables £310,000, cash £45,000; trade payables £280,000, tax payable £90,000, bank overdraft £35,000. Calculate net current assets.
   Show answer

   £210000. Current assets £615,000 - current liabilities £405,000 = £210,000.

3. Machinery cost £900,000 and has accumulated depreciation of £340,000 at the year end. What is its carrying amount in the statement of financial position?
   Show answer

   £560000. 900,000 - 340,000 = £560,000.

4. Total equity is £4,200,000, non-current liabilities are £1,500,000 and current liabilities are £650,000. What are total assets?
   Show answer

   £6350000. Total assets = total equity and liabilities = £6,350,000.

5. A bank loan of £600,000 is repayable in one sum in four years' time. Where is it shown?
   • Current liabilities
   • Non-current liabilities
   • Equity
   • Current assets
   Show answer

   Non-current liabilities. It is not due within 12 months, so it is non-current.

6. The tax charge for the year has not been paid at the year end. Where is it shown in the statement of financial position?
   • Non-current liabilities
   • Equity
   • Deducted from retained earnings in the statement of changes in equity
   • Current liabilities
   Show answer

   Current liabilities. Tax is normally payable within a year, so the unpaid amount is a current liability.

7. Where does an insurance prepayment appear?
   • Other payables (current liabilities)
   • Trade and other receivables (current assets)
   • Non-current assets
   • Equity
   Show answer

   Trade and other receivables (current assets). A prepayment is an amount paid in advance: the company is owed the benefit, so it is a current asset.

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Sources

• Pearson Edexcel International Advanced Subsidiary/Advanced Level in Accounting specification (XAC11/YAC11), Issue 2
• Pearson Edexcel IAL Accounting WAC12 Unit 2 mark scheme, October 2024

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