SFP shows?

SFP shows?

• A. Assets and liabilities, financial health and strength.
• B. Cash flows in and out.
• C. Ownership changes and gains.
• D. Performance and gains.

Answer: (A)

A statement of financial position shows a snapshot of what the business owns and owes at a given date, indicating its financial position. It lists assets on one side and liabilities plus equity on the other, revealing how resources are financed and how strong the financial position is overall. This focus on assets and liabilities and the resulting financial health is why the SFP is described this way. It isn’t about cash inflows and outflows (that’s shown in the cash flow statement), nor about performance over a period (that’s the income statement), nor primarily about changes in ownership and gains (which relate to equity movements).

A statement of financial position shows a snapshot of what the business owns and owes at a given date, indicating its financial position. It lists assets on one side and liabilities plus equity on the other, revealing how resources are financed and how strong the financial position is overall. This focus on assets and liabilities and the resulting financial health is why the SFP is described this way. It isn’t about cash inflows and outflows (that’s shown in the cash flow statement), nor about performance over a period (that’s the income statement), nor primarily about changes in ownership and gains (which relate to equity movements).