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 .
