the contents of a statement of financial position including non-current assets, current assets, current liabilities, net current assets, net assets, non-current liabilities, reserves and equity

10.1 Financial Statements – Statement of Financial Position

Non‑Current Assets

These are items the company keeps for more than a year. Think of them as the permanent fixtures in your house: the building, machinery, and long‑term investments.

• Property, plant and equipment (PPE) – e.g., factories, office buildings.
• Intangible assets – e.g., patents, trademarks, goodwill.
• Long‑term investments – shares or bonds held for >12 months.

Current Assets

These are items expected to be converted to cash or used up within a year. They’re like the daily supplies you keep in the kitchen.

• Cash and cash equivalents – money in hand or bank.
• Accounts receivable – money owed by customers.
• Inventories – goods ready for sale.
• Prepaid expenses – payments made in advance (e.g., insurance).

Current Liabilities

These are debts due within a year. Picture them as short‑term bills you need to pay soon.

• Accounts payable – money owed to suppliers.
• Short‑term loans and overdrafts.
• Accrued expenses – wages, taxes, utilities.
• Other current liabilities – e.g., customer deposits.

Net Current Assets (or Net Working Capital)

Calculated as Current Assets – Current Liabilities:

\$ \text{Net Current Assets} = \text{Current Assets} - \text{Current Liabilities} \$

If the result is positive, the company can cover its short‑term debts with its short‑term assets. If negative, it may need extra funding.

Net Assets (or Net Worth)

Net Assets = Total Assets – Total Liabilities. It shows the owner’s claim on the company.

\$ \text{Net Assets} = \text{Total Assets} - \text{Total Liabilities} \$

Non‑Current Liabilities

Debts that will be paid after more than a year. Think of them as long‑term mortgage payments.

• Long‑term loans and bonds payable.
• Lease obligations.
• Deferred tax liabilities.
• Other long‑term provisions.

Reserves and Equity

These represent the owner’s stake and retained earnings. They’re the foundation of the house that holds everything together.

• Share capital – money raised from issuing shares.
• Retained earnings – profits kept in the business.
• Other reserves – e.g., revaluation reserve, statutory reserve.
• Accumulated other comprehensive income.

Sample Statement of Financial Position (as of 31 Dec 2023)