Definition of Statement of Financial Position
The statement of financial position is another name for the balance sheet. It is one of the main financial statements.
The statement of financial position reports an entity’s assets, liabilities, and the difference in their totals as of the final moment of an accounting period.
The structure of the statement of financial position is similar to the basic accounting equation. For a corporation the format will be: Assets = Liabilities + Stockholders’ Equity. A nonprofit organization’s format will be: Assets = Liabilities + Net Assets.
The statement of financial position must reflect the basic accounting principles and guidelines such as the cost, matching, and full disclosure principle to name a few. Accordingly, the statement of financial position is more meaningful when it is prepared under the accrual method of accounting.
