A statement of financial position lists what the business owns and owes on one date, and shows that net assets equal capital. It appears in nearly every sole-trader question after the income statement, and examiners expect the correct headings, order and totals.
This lesson continues from building the income statement and sits inside sole-trader statements. We keep the same business, Hasnah Home Supplies, so the profit of RM17,000 carries straight across.
What is the layout, and why that order?
The layout runs from the longest-lasting items to the shortest, then subtracts what is owed.
- Non-current assets: cost, accumulated depreciation and net book value.
- Current assets: inventory, receivables (less allowance), prepayments, bank and cash.
- Current liabilities: payables, accruals and any overdraft.
- Non-current liabilities: loans repayable after more than a year.
- Capital: opening capital plus profit, less drawings.
Net assets are total assets less all liabilities. That figure must equal the closing capital.
How do you build it step by step?
- Collect the closing balances and the adjustments from the year end.
- Show non-current assets at cost, subtract accumulated depreciation and carry the net book value.
- Show receivables net of the allowance, and include any prepayments as current assets.
- List current liabilities, including accruals, and total them.
- Add the capital section and compare it with net assets.
Worked example
These balances come from Hasnah Home Supplies at 31 December 2025 (all in RM).
| Item | RM |
|---|---|
| Shop equipment at cost | 30,000 |
| Accumulated depreciation of shop equipment | 12,500 |
| Closing inventory | 9,000 |
| Trade receivables | 8,000 |
| Allowance for irrecoverable debts | 400 |
| Rent prepaid | 1,200 |
| Bank | 6,400 |
| Cash | 300 |
| Trade payables | 5,300 |
| Electricity owing | 300 |
| Bank loan (repayable in 4 years) | 10,000 |
| Opening capital | 15,500 |
| Drawings | 6,100 |
| Profit for the year (from the income statement) | 17,000 |
Step 1, non-current assets: 30,000 − 12,500 = 17,500.
Step 2, current assets: receivables are 8,000 − 400 = 7,600. Then 9,000 + 7,600 + 1,200 + 6,400 + 300 = 24,500.
Step 3, current liabilities: 5,300 + 300 = 5,600. Working capital is 24,500 − 5,600 = 18,900.
Step 4, assemble.
| Hasnah Home Supplies: Statement of financial position at 31 December 2025 | RM | RM |
|---|---|---|
| Non-current assets: Shop equipment (30,000 − 12,500) | 17,500 | |
| Inventory | 9,000 | |
| Trade receivables (8,000 − 400) | 7,600 | |
| Prepayment | 1,200 | |
| Bank | 6,400 | |
| Cash | 300 | |
| Current assets | 24,500 | |
| Total assets | 42,000 | |
| Trade payables | 5,300 | |
| Accruals | 300 | |
| Current liabilities | (5,600) | |
| Bank loan | (10,000) | |
| Net assets | 26,400 | |
| Capital: Opening capital | 15,500 | |
| Add: Profit for the year | 17,000 | |
| 32,500 | ||
| Less: Drawings | (6,100) | |
| Closing capital | 26,400 |
Check: 17,500 + 24,500 = 42,000. Then 42,000 − 5,600 − 10,000 = 26,400. On the capital side, 15,500 + 17,000 − 6,100 = 26,400, so the two halves agree.
What mistake catches students here?
A common slip is to show receivables at 8,000 and put the allowance of 400 among the liabilities.
Mistaken layout: receivables 8,000 in current assets, allowance 400 listed among the current liabilities.
Current assets become 24,900, total assets 42,400 and current liabilities 6,000.
Net assets are still 42,400 − 6,000 − 10,000 = 26,400, so the statement agrees at the bottom and the error stays hidden. The allowance is not a debt owed to anyone.
It is an estimate that lowers the value of receivables, so it is deducted from them: 8,000 − 400 = 7,600. Showing it as a liability overstates both total assets and current liabilities by 400, which costs presentation marks and changes ratios.
Check yourself
Try these on paper first, then open each answer.
1. Equipment cost is RM12,000 and accumulated depreciation is RM4,500. What is shown for non-current assets?
Show answer
12,000 − 4,500 = RM7,500 net book value.
2. Current assets are inventory RM2,800, receivables RM3,100, bank RM900. Current liabilities are payables RM2,000 and accruals RM200. Find working capital.
Show answer
Current assets = 2,800 + 3,100 + 900 = 6,800. Current liabilities = 2,000 + 200 = 2,200. Working capital = 6,800 − 2,200 = RM4,600.
3. Opening capital is RM9,000, profit RM5,200 and drawings RM3,000. What closing capital should appear?
Show answer
9,000 + 5,200 − 3,000 = RM11,200.
Check: 14,200 − 3,000 = 11,200.
Where does this lead next?
The drawings figure in the capital section deserves its own lesson, because it is where profit and capital are most often confused: see account for drawings separately from expense. You can rebuild each statement line with the double-entry and ledger trainer, and try the mixed practice set once the layout feels natural.
If the order of headings still slows you down in exams, that is the kind of habit our teachers help to fix in online one-to-one Accounting tuition.