Statement of Financial position (SOFP)
The SOFP is a snapshot of a company’s assets, liabilities and capital at a certain point in time. The equity should equal the difference between total assets and total liabilities.
The SOFP consist of:
- Assets– Current Assets (eg Cash, Receivables), Non-Current Asset (eg Buildings, plants)
- Liabilities– Current liabilities (eg Payables), Non-current liabilities (eg Loans)
- Capital– Retained earnings
An item is a current asset when:
- Asset is primarily for trading purposes and short-term and within 12 months of the reporting period.
- In the form of cash or an asset equivalent to cash. Current assets include inventories, receivables and marketable securities expected within 12 months.
An example of a current asset is:
Primarily for the purpose of trading and settled within 12 months after reporting period. The payments cannot be deferred to after a year. Current Liabilities include Bank overdraft, payables and accruals.
Non- Current Liabilities
Payments Settled after 12 months and usually include loans, bonds etc.
Assets used within an organisation for more than a year such as buildings, plant and machinery.
- Primarily used for production or supply of goods or services.