Financial statements – Part B prepares the statement of financial position (balance sheet) and applies year-end adjustments.
Statement of financial position
$\text{Assets} = \text{Capital} + \text{Liabilities}$
Capital = Opening capital + Profit − Drawings
It lists non-current assets, current assets, current liabilities and capital, after adjusting for accruals, prepayments, depreciation and provisions.
Remember
- Assets = Capital + Liabilities.
- Closing capital = Opening capital + Profit − Drawings.