Financial Accounting · Statement of financial position

Format and Content of the Statement of Financial Position (IAS 1)

Updated 11 October 2026 · Fact-checked

The statement of financial position shows an entity's assets, liabilities and equity at one date. IAS 1 requires assets and liabilities to be split into current and non-current. To solve questions, classify each item, total each group, then check that total assets equal equity plus liabilities.

Understand Format and Content of the Statement of Financial Position

The statement of financial position is a snapshot. It shows what the entity owns (assets), what it owes (liabilities) and what is left for the owners (equity) at the reporting date. It is built on the accounting equation: assets = equity + liabilities.

IAS 1 Presentation of Financial Statements sets out the minimum items on the face of the statement. These include property, plant and equipment, intangible assets, inventories, trade and other receivables, cash and cash equivalents, trade and other payables, provisions, financial liabilities, tax liabilities, and issued capital and reserves. Extra lines are added if they help users understand the position.

Most entities present assets and liabilities as current and non-current. An asset is current if the entity expects to realise it, sell it or use it in its normal operating cycle, or holds it mainly for trading, or expects to realise it within 12 months after the reporting period, or it is cash or a cash equivalent (not restricted for at least 12 months). All other assets are non-current.

A liability is current if the entity expects to settle it in its normal operating cycle, holds it mainly for trading, or it is due to be settled within 12 months after the reporting period, or the entity has no right at the reporting date to defer settlement for at least 12 months. All other liabilities are non-current.

IAS 1 does not prescribe one fixed order or layout. It only specifies the minimum line items. The layout used in ACCA exams is an exam presentation convention, not an IAS 1 requirement: non-current assets first, then current assets, then equity, then non-current liabilities, then current liabilities. Within each group, items go in the order shown in the exam format. The statement must balance. If it does not, you have misclassified, omitted or double counted an item.

Key formulas to remember

Accounting equation: Assets = Equity + Liabilities; Total assets must equal total equity and liabilities. Use it as your final check.
Net assets: Net assets = Total assets − Total liabilities = Equity; Useful when the question gives equity items and asks for a missing figure.
Working capital: Working capital = Current assets − Current liabilities; A common objective test link between classification and liquidity.
Current asset test: Current if: in operating cycle, held for trading, expected to be realised within 12 months, or cash/cash equivalent (unless restricted from being exchanged or used to settle a liability for at least 12 months); An asset that meets none of these tests is non-current.
Current liability test: Current if: settled in operating cycle, held for trading, due within 12 months, or no right to defer 12 months; A loan repayable in 12 months or less is current. The part due later is non-current.
Carrying amount: Carrying amount = Cost (or valuation) − Accumulated depreciation or amortisation; Non-current assets appear at carrying amount, not cost.
Equity: Equity = Share capital + Share premium + Revaluation surplus + Retained earnings; Add other reserves if given.

How to solve Format and Content of the Statement of Financial Position questions

Use the same method for any question that asks you to prepare, complete or interpret the statement.

1Read the requirement and note the reporting date and whether you need a full statement, a subtotal or one line.
2List every item given. Mark each as an asset, liability or equity item.
3Classify each asset and liability as current or non-current using the 12-month and operating cycle tests.
4Calculate carrying amounts: cost less accumulated depreciation for non-current assets, and receivables net of any allowance.
5Split mixed items, such as a loan with part repayable within 12 months, into current and non-current portions.
6Calculate equity items. Retained earnings usually equal opening balance plus profit for the year less dividends paid.
7Total each section and check total assets equal equity plus liabilities.
8Select the answer that matches your figure, or enter the number in the format asked.

Quickest way: Three-bucket sort and balance check

When to use it: Use it for objective test questions with a list of balances and a request for one total or one classification.

Draw three buckets: assets, liabilities, equity.
Sort each item into a bucket in seconds, ignoring items such as expenses that belong in profit or loss.
Net off depreciation and allowances before adding.
Find the figure asked for. If it is a missing balancing figure, use assets = equity + liabilities.
Check the due date of any liability before choosing current or non-current.

Common mistakes in Format and Content of the Statement of Financial Position

Showing non-current assets at cost instead of carrying amount.
The trial balance lists cost and accumulated depreciation as separate lines, so students pick up only the cost line.
Fix: Always deduct accumulated depreciation from cost before putting the asset in the statement.
Classifying a whole loan as non-current when part is repayable within 12 months.
Students look at the original term of the loan, not the amount due after the reporting date.
Fix: Split the loan. The instalment due within 12 months is current. The rest is non-current.
Treating the bank overdraft as a negative current asset.
Students net the bank balance against other cash items.
Fix: Show an overdraft as a current liability, unless the question states a right of set-off.
Putting dividends declared after the year end as a liability.
Students see 'dividend' and assume an obligation exists.
Fix: A dividend declared after the reporting date is not a liability at that date. Only include a dividend declared on or before it and not yet paid.
Including receivables at gross value when an allowance is given.
The allowance for receivables is a separate ledger balance and is easy to miss.
Fix: Show trade receivables net: gross receivables less the allowance.
Treating all inventories and receivables as current only because they are 'working capital' items.
Students memorise a shortcut rather than the tests.
Fix: Apply the tests. Receivables not due within 12 months and outside the operating cycle would be non-current.

Worked examples

Example 1

At 31 December, a company has: land and buildings at cost $500,000 with accumulated depreciation $100,000; inventory $60,000; trade receivables $85,000 with an allowance for receivables of $5,000; cash $20,000; trade payables $55,000; a bank loan of $200,000, of which $40,000 is repayable within 12 months. What are total current assets and total current liabilities?

Show the solution

Land and buildings are non-current at carrying amount of $400,000. They are not part of current assets.
Current assets: inventory $60,000 + net receivables ($85,000 − $5,000 = $80,000) + cash $20,000 = $160,000.
Current liabilities: trade payables $55,000 + loan instalment due within 12 months $40,000 = $95,000.
The remaining $160,000 of the loan is non-current.

Answer: Total current assets are $160,000 and total current liabilities are $95,000.

Example 2

A company has total assets of $750,000. Its liabilities are trade payables $90,000, a 10% loan note repayable in five years $150,000, and a tax liability $30,000. Its share capital is $200,000 and share premium is $50,000. What are retained earnings?

Show the solution

Total liabilities = $90,000 + $150,000 + $30,000 = $270,000.
Equity = total assets − total liabilities = $750,000 − $270,000 = $480,000.
Share capital plus share premium = $200,000 + $50,000 = $250,000.
Retained earnings = $480,000 − $250,000 = $230,000.
Check: $250,000 + $230,000 + $270,000 = $750,000, which equals total assets.

Answer: Retained earnings are $230,000.

Exam tips

Do the classification test first. Many objective test questions are really asking whether an item is current or non-current.
Check due dates on loans and the reporting date. A loan due in 11 months is current even if it was taken out for ten years.
Use the balancing check on number entry questions. If a missing figure is needed, assets = equity + liabilities finds it fast.
In multiple response questions, read how many answers to select. Do not pick items that belong in profit or loss, such as depreciation expense.
Learn the ACCA exam layout: non-current assets, current assets, equity, non-current liabilities, current liabilities. It is the exam presentation convention, not an IAS 1 requirement.

Practice questions from Statement of financial position

Format and Content of the Statement of Financial Position in other exams

The same ground in other exams, if you are preparing for more than one or want another angle on it.

Format and Content of the Statement of Financial Position: frequently asked questions

What layout does the statement of financial position follow in the ACCA exam?

The exam layout lists non-current assets and current assets, then equity, then non-current and current liabilities. This order is an ACCA presentation convention, not an IAS 1 requirement. IAS 1 only lists minimum items for the face of the statement and does not fix one rigid layout. Whatever the layout, total assets must equal total equity and liabilities.

How do I tell a current asset from a non-current asset?

Ask whether the entity expects to sell or use it in its normal operating cycle, holds it for trading, or expects to realise it within 12 months of the reporting date. Cash and cash equivalents also count as current, unless they are restricted for at least 12 months. If none of these apply, it is non-current.

Is a bank overdraft a current liability?

Usually yes. An overdraft is normally repayable on demand, so it is shown as a current liability. Do not net it against positive cash balances unless the question says there is a right of set-off.

Do I need to memorise a full statement of financial position layout for ACCA FA?

Yes, know the order of the main headings. Section B includes accounts preparation and consolidations, where you may need to build statements. Section A can test classification and totals. Practise writing the headings from memory until you can do it without thinking.