LEARNING ACTIVITY SHEET

QUARTER First / SEMESTER First

Name: __________________________________________________ Score: _______

Grade & Section: _______________________ Subject: _______________________

Name of Teacher: ____________________________________Date: _____________

I. Title: The Elements of Statement of Financial Position (SFP)
II. Type of Activity:         Concept notes with formative activities

LAS for summative assessment ( Written Work Performance Task)

III.MELC: Identify the elements of the SFP and describe each of them (ABM_FABM12-
Ia-b-1).

IV. Learning Objective/s:

 Identify and describe the different elements of Statement Financial Position

(SFP);
 Recognize the importance of SFP in managing and operating a sole
proprietorship; and
 Classify each account title according to its classification.

V. Reference/s

For Print Material/s:

 
Ballada, W., 2014, DomDane Publishers, Manila, Basic Accounting, pp 3-10/3-
16
Beticon, J. L. Domingo, J. C. D. & Yabut, F. A. D., 2016, Vibal Group Inc., Quezon
City, Fundamentals of Accountancy, Business and Management 2, pp 12-
21
Empleo, P.& Robles N., 2019, Millenium Books Inc., Mandaluyong City, The
Philippine Financial Reporting, pp 111-115
For Online Resource/s:

https://wpfsi.com/what-is-an-operating-cycle-in-a-business-why-does-a-business-
need-working-capital/ Calvin Tucker/ Operating Cycle in Business/
[email protected]/ 07022020

VI. Concept Notes

Statement of Financial Position

A Statement of Financial Position (SFP) also known as the balance sheet presents
the financial position of an enterprise as of a given date. It presents three elements:
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assets, liabilities and equity. This statement follows a formal presentation of the basic
accounting equation: assets = liabilities + equity.

Example:

If the asset is 100, 000, then, the sum of liabilities and owner’s equity must be
equal to the asset which is a total of 100,000. Hence, mathematically speaking, 100, 000
= 50,000 + 50,000.
An asset is a present economic resource controlled by the entity as a result of past
events (IASB 2010). It can be classified as current and non-current when presented in
the statement. Assets, under Philippine Accounting Standard (PAS) No. 1, can be
classified as current when it satisfies any one of the following criteria:
1. It is expected to be realized in, or is intended for sale or consumption in the
entity’s normal operating cycle (operating cycle is the average period of time
required for a business to make an initial outlay of cash to produce goods, sell
the goods, and receive cash from customers in exchange for the goods);
2. It is held primarily for the purpose of being traded;
3. It is expected to be realized within twelve months after the reporting period; or
4. It is cash or a cash equivalent, unless it is restricted from being exchanged or
used to settle a liability for at least twelve months from the end of the reporting
period.

Some examples of current assets are cash and cash equivalents, accounts
receivable, and supplies.

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All other assets that do not meet any of the foregoing criteria are classified as non-
current assets. Some examples of non-current assets are property, plant and equipment
and intangible assets.

A liability is a present obligation of an entity arising from past events, the

settlement of which is expected to result in an outflow from the enterprise of resources
embodying economic benefits. Liabilities must be classified as current and non-current in
the presentation to the Statement of Financial Position (SFP).

An entity shall classify a liability as current when:

1. It expects to settle the liability in its operating cycle;
2. It holds the liability primarily for the purpose of trading;
3. The liability is due to be settled within twelve months after the reporting period;
or
4. The entity does not have an unconditional right to defer settlement of the liability
for at least twelve months after the reporting period.

Examples of current liabilities include the following: accounts payable, salaries

payable, and utilities payable.

All other liabilities should be classified as non-current liabilities. Examples include

long-term debt, and bonds payable.

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The owner’s equity section of the Statement of Financial Position (SFP) for a sole
proprietorship is composed of capital, withdrawals and income summary account. Capital
is used to record the original and additional investments of the owner to the entity. This
is increased by the amount of profit earned during the year or is decreased by a loss.
Withdrawals, on the other hand, is when the owner withdraws cash or other assets
thereby reducing the owner’s equity account. Income summary is a temporary account
used at the end of the accounting period to close income and expenses.

Task 1. You can do This. Read the statements carefully. Write the correct word/s to
complete the statements.

1. There are _____ elements in a Statement of Financial Position.

2. The elements of an SFP are _________, _________ and ___________.
3. The difference between assets and liabilities is ______________.
4. When an entity acquires something “on account”, it creates ______________.
5. When an owner makes an additional investment in the business, it increases
________.

Task 2. Check your Concepts. Match the concepts in Column A to their descriptions in
Column B.
Column A Column B

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1. Current Asset a. this account reduces the entity’s ownership in the

business
2. Liabilities b. maybe defined as the remaining value of an
owner’s interest in a company
3. Equity c. the entity is expecting this to be realized, sold or
consumed within the normal operating cycle
4. Balance sheet d. present obligation arising from past events
wherein the settlement of which will result to an
outflow from the entity’s resources
5. Withdrawals e. reveals the financial status of a business at a
given period of time
Task 3. Ponder on This. Write T if the statement is correct or F if the statement is not
correct.
1. The statement of financial position is also known as the balance sheet.
2. The date in the heading of a statement of financial position is written “For the year
ended December 31, 2018”.
3. Utilities expense is a liability account.
4. Owner’s equity is the account title used for a sole proprietorship in the equity
portion of SFP.
5. Balance sheet accounts are nominal accounts.

Task 4. You can do More. Read the questions carefully. Choose the letter that best
describes each of the statements.
1. Which of the following is not an asset account?
a. Prepaid expense- advance payment to cover future expenses
b. Notes receivable- amount of money owed by the customer or debtor to the
business evidenced by a promissory note
c. Sales- earnings made by the business that is into selling of goods or
merchandise
d. Equipment- represents manual or automated machines used in the business
2. The components of the Statement of Financial Position (SFP) are the following,
except?
a. Current asset, Non-current asset
b. Non-current liabilities, current liabilities
c. Current owner’s equity, non-current asset
d. Current liabilities, current assets
3. Which of the following is a liability account?
a. Salaries expense
b. Interest receivable
c. Advances from customers
d. Advances to employees
4. Which of the following statements does not describe an asset?
a. result of a future transaction
b. controlled by the business entity
c. economic benefits are expected to flow
d. it arises from past events

5. This is another way to state the accounting equation

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a. Assets = Owner’s Equity – Liabilities

b. Assets – Liabilities = Owner’ Equity
c. Assets + Liabilities = Owner’s Equity
d. Assets = Liabilities – Owner’s Equity

6. Which of the following is not included in preparing SFP?

a. Accounts Payable
b. Equipment
c. Revenue
d. Notes Receivable
Task 5. Accounting Quest. Calculate for the elements of SFP. Supply the missing
amounts to complete the accounting equation.
Assets Liabilities Owner’s Equity
1. 250, 000 145, 000
2. 375, 000 155, 000
3. 205, 000 137, 500
4. 272, 500 118, 250
5. 196, 000 56, 500

Task 6. Classify Me. Identify the following account titles to which element (asset, liability
or equity) of SFP they belong.
Account Titles Element
1. Cash equivalents
2. Dela Cruz, Drawings
3. Income/ Profit
4. Accounts Payable
5. Property, plant and equipment

Task 7. Challenge Yourself. Given the following table, identify and answer the following
guide questions using the situation provided:
ABC Company, owned and managed by Mr. Abaniko Sy, had the following account
balances for the year ended December 31, 2018:
Cash 25,500
Interest payable on Long-term debt 5,320
Inventories 44,250
Accounts Receivable 10,005
Property, plant and equipment 20,965
Accounts Payable 95,400
TOTAL 201,440

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Guide Questions:

1. Compute for the total asset.

2. How much is the total liability?
3. How much is the total equity?
4. Illustrate the accounting equation using the balances computed.

Task 8. Let’s get Familiar. Read the questions carefully. Answer each of the questions
briefly and concisely but substantially.
1. What are the elements of Statement of Financial Position (SFP)?
_______________________________________________________________
________________________________________________________________
________________________________________________________________

2. What information is provided by a balance sheet?

________________________________________________________________
________________________________________________________________
________________________________________________________________

3. What is an asset? Give at least 2 examples.

________________________________________________________________
________________________________________________________________

4. What is a liability? Give at least 2 examples.

________________________________________________________________
________________________________________________________________
 
5. What is equity?
________________________________________________________________
________________________________________________________________
________________________________________________________________

Task 9. Word Search. Complete the crossword puzzle on Statement of Financial Position
(SFP). Use the descriptions as your guide below to reveal the concept.

1     1                   
    
  
2    2                
3             
    
     3 
4                            
       
       
       
       
  
  
 

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Across Down
1- the balance sheet classification 1- a resource of the company which
under which a company reports will have future benefit
customer deposits and receipts for 2- an asset is reported as a current
services that have not yet been asset if it is cash or will turn to
performed cash or to be used up within one
2- the remaining value of an owner’s year of the balance sheet date or
interest after all liabilities have within the ______________
been deducted cycle, whichever is longer.
3- the term “fixed asset” is referred as 3- the balance sheet is also known
Property, _______ and Equipment as Statement of Financial
4- the basic _______________ ____________
equation is A=L+E

Task 10. Level Up. Read and analyze the situations carefully. Identify the elements in
every business transaction listed below.
Example: Asset - Cash or Liability - Accounts Payable
June 1 Mr. M deposited cash to the bank amounting to P50,000.

June 5 Mr. M bought equipment from Adessa amounting to P175,000. He paid

30% cash and the balance payable after 1 month.

June 15 Mr. M paid his electric bill for the month of May amounting to P5,000.

June 20 Mr. M paid one month advance rent amounting to P6,500.

June 30 Mr. M borrowed from BPO Bank amounting to P100,000.

Tasks 11-12. Critical Thinking. List down and identify the different assets and liabilities
that you have in your household. From the accounts that you identified, make a
hypothetical statement of your family’s financial position. (Reminder: Data will be
confidential especially on matters of financial status).

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VII. Notes to teachers:

Rubrics (for Tasks 11 and 12)
5 4 3 2 1
Not yet
Criteria
Thoroughly Meet Approaching approaching
meet standards standards standards standards No attempt
Basic
Limited
I have complete understanding
understanding
understanding of of the activity.
of the activity.
the activity. Identifies Response
Identifies few No
Identifies clearly most of the does not fit
Knowledge elements of understaning
the elements of elements and the given
the problem of the activity.
the problem and may or may activity.
and may give
gives correct not give the
incorrect
answer. correct
answer.
answer.

My work is My work is
My work is clear, My work is
clear and clear and I
detailed and not so clear
easy to follow. can My work is
easy to follow. I but I can tell
I can fully systematically confusing
Presentation can thoroughly you what I
explain the explain the and hard to
explain the steps have done to
steps on how steps on how follow.
on how I arrive at arrive at my
I arrive at my I arrive at my
my answer. answer.
answer. answer.
I started the
I completed
I completed calculations
the exercise. My answer
I accurately the exercise. correctly but I
There are is incorrect
completed the There are made
very few and I have
Accuracy exercise. All the errors in my numerous
errors but my very few
steps are solution but errors. My
answer is calculations
correct. my answer is answer is
generally .
accurate. likely
accurate.
incorrect.

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