INSTRUCTION/DELIVERY (140 MINS)

1. Define the term Statement of Financial Position and introduce the term Permanent Accounts

STATEMENT OF FINANCIAL POSITION – Also known as the balance sheet. This statement

includes the amounts of the company’s total assets, liabilities, and owner’s equity which in totality

provides the condition of the company on a specific date. (Haddock, Price, & Farina, 2012)

PERMANENT ACCOUNTS – As the name suggests, these accounts are permanent in a sense that

their balances remain intact from one accounting period to another. (Haddock, Price, & Farina,

2012) Examples of permanent account include Cash, Accounts Receivable, Accounts Payable, Loans

Payable and Capital among others. Basically, assets, liabilities and equity accounts are permanent

accounts. They are called permanent accounts because the accounts are retained permanently in

the SFP until their balances become zero. This is in contrast with temporary accounts which are

found in the Statement of Comprehensive Income (SCI). Temporary accounts unlike permanent

accounts will have zero balances at the end of the accounting period.
CONTRA ASSETS – Contra assets are those accounts that are presented under the assets portion

of the SFP but are reductions to the company’s assets. These include Allowance for Doubtful

Accounts and Accumulated Depreciation. Allowance for Doubtful Accounts is a contra asset to

Accounts Receivable. This represents the estimated amount that the company may not be able to

collect from delinquent customers. Accumulated Depreciation is a contra asset to the company’s

Property, Plant and Equipment. This account represents the total amount of depreciation booked

against the fixed assets of the company.

2. Provide a sample SFP to the learners (powerpoint or acetate or hard copy) as an overview. Teacher

can use the sample below or find a new one

LEARNING IS FUN COMPANY

STATEMENT OF FINANCIAL POSITION

AS OF DECEMBER 31, 2016

Assets
Current Assets

Cash Php 100,000.00

Accounts Receivable Php 500,000.00

Less: Allowance for Doubtful Accounts (50,000.00) 450,000

Accrued Income 300,000

Inventory 200,00

Prepaid Expenses 50,000

Total Current Assets Php 1,100,000.00

Noncurrent Assets

Long Term Investments Php 1,250,000.00

Intangible Assets 500,000.00

Property, Plant and Equipment

Cost Php 1,000,000.00

Less: Accumulated Depreciation (300,000.00) 700,000.00

Total Noncurrent Assets Php 1,450,000.00

Total Assets Php 3,550,000.00