Statement of Financial Position HELP!

Mollypod88

When completing a Statement of Financial Position is there a certain way you have to lay our Current Assets and Liabilities?

Thank you!!

MarkT

Assets & Liabilities have to be placed in their order of liquidity.

Assets:

Start with the least downwards

Stock
SLCA
Prepayments
Bank
Cash

Liabilities

PLCA
Bank (overdraft)
Accrual
VAT

This is the usual order :001_smile:

Mollypod88

Sorry I'm having a really stupid day today :huh:

What does order of liquidity mean?

KaySarah

Mollypod88 wrote: »

Sorry I'm having a really stupid day today :huh:

What does order of liquidity mean?

How "LIQUID" they are (how much money they have) ... when one goes Into Liquidation it is because they have no money.

crispy

As above - liquidity, how quickly/readily an item can be converted back into cash. Eg. stock has to be sold first, so is the least liquid, cash at bank most liquid (as it is cash).

Mollypod88

Thanks everyone :laugh:

Yazi

I remember Assets like this : Sit Down Pretty Black Cat.....

Stock = Sit
SLCA = Down (Debtors)
Prepayments = Pretty
Bank = Black
Cash = Cat

SarahJS

I'm not 100% sure, but for the exams I don't think it matters (obviously best practice for real life though!).

I'm sure I even saw balance c/d not at the end of the account in the solutions for an AP2 question (a find the missing balance one).

MarkT

Yazi wrote: »

I remember Assets like this : Sit Down Pretty Black Cat.....

Stock = Sit
SLCA = Down (Debtors)
Prepayments = Pretty
Bank = Black
Cash = Cat

Thats a pretty clever little tip - will remember that for future

SarahJS wrote: »

I'm not 100% sure, but for the exams I don't think it matters (obviously best practice for real life though!).

I'm sure I even saw balance c/d not at the end of the account in the solutions for an AP2 question (a find the missing balance one).

It matters, trust me - you may collect points for getting the correct answer, but you can also lose them for a failure in method.

AFAIK, there are three areas of marking, I may be wrong Calculation, Method and Fundamental - please someone correct me if I am wrong on these points