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Statement of Financial Position (SOFP)
A Statement of Financial Position, also known as a Balance Sheet, is a financial statement that provides a snapshot of a company's financial position at a specific point in time. It is one of the three main financial statements used in business finance, along with the income statement and the cash flow statement.
Here are some key points about the Statement of Financial Position:
- It presents the company's assets, liabilities, and shareholders' equity at a specific point in time.
- Assets are the company's resources, such as cash, inventory, and property.
- Liabilities are the company's obligations, such as debt and accounts payable.
- Shareholders' equity is the difference between the company's assets and liabilities and represents the value of the company's ownership.
- The Statement of Financial Position helps investors, creditors, and other stakeholders understand the company's financial health and assess its ability to generate profit and repay debts.
- It is typically prepared at the end of each fiscal year and is subject to external audit.