Statement of financial position — practice questions

Equity = Assets − Total liabilities = 500 000 − (80 000 + 150 000) = $270 000

If current assets are $200 000: Working capital = 200 000 − 80 000 = $120 000

Step 1: Calculate Total Assets

• Non-Current Assets = Property, Plant, and Equipment = $350,000
• Current Assets = Inventory + Trade Receivables + Cash at Bank
  • = $75,000 + $45,000 + $20,000 = $140,000
• Total Assets = Non-Current Assets + Current Assets
  • = $350,000 + $140,000 = $490,000

Step 2: Calculate Total Liabilities

• Non-Current Liabilities = Long-term Bank Loan = $150,000
• Current Liabilities = Trade Payables = $60,000
• Total Liabilities = Non-Current Liabilities + Current Liabilities
  • = $150,000 + $60,000 = $210,000

Step 3: Calculate Retained Earnings using the Accounting Equation

• The equation is: Assets = Liabilities + Equity
• We know Equity = Share Capital + Retained Earnings
• So, Assets = Liabilities + Share Capital + Retained Earnings
• $490,000 = $210,000 + $200,000 + Retained Earnings
• $490,000 = $410,000 + Retained Earnings
• Retained Earnings = $490,000 - $410,000 = $80,000

Verification:

• Total Assets = $490,000
• Total Liabilities + Total Equity = $210,000 + ($200,000 + $80,000) = $490,000
• The statement balances.