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Explain the contents of the projected Statement of Financial Position of a start up venture

 Assets
Assets are resources that the company can use to create goods or service and generate revenue. Assets are classified in the balance sheet as current or non-current assets depending on the duration over which the reporting entity expects to derive economic benefit from its use. An asset which will deliver economic benefits to the entity over the long term is classified as non-current whereas those assets that are expected to be realized within one year from the reporting date are classified as current assets.
Assets are also classified in the statement of financial position on the basis of their nature as follows,
Tangible and intangible: Non-current assets with physical substance are classified as property, plant and equipment whereas assets without any physical substance are classified as intangible assets for example Goodwill are a type of an intangible asset.
Inventories balance includes goods that are held for sale in the ordinary course of the business. Inventories may include raw materials, work in progress and finished goods.
Trade receivables include the amounts that are recoverable from customers upon credit sales. Trade receivables are presented in the statement of financial position after the deduction of allowance for bad debts.
Cash and cash equivalents include cash in hand along with any short term investments that are readily convertible into known amounts of cash.
Liabilities
A liability is an obligation that a business owes to other companies, individuals or institution. Liabilities must be classified in the statement of financial position as current or non-current depending on the duration over which the entity intends to settle the liability. A liability which will be settled over the long term is classified as non-current whereas those liabilities that are expected to be settled within one year from the reporting date are classified as current liabilities.
Liabilities are also classified in the statement of financial position on the basis of their nature:
Trade and other payables primarily include liabilities due to suppliers and contractors for credit purchases. Sundry payables which are too insignificant to be presented separately on the face of the balance sheet are also classified in this category.
Short term borrowings typically include bank overdrafts and short term bank loans with a repayment schedule of less than 12 months.
Long-term borrowings comprise of loans which are to be repaid over a period that exceeds one year. Current portion of long-term borrowings include the installments of long term borrowings that are due within one year of the reporting date.
Current Tax Payable is usually presented as a separate line item in the statement of financial position due to the materiality of the amount.
Equity
Equity consists of the ownership of the company. In other words, this measures their stake in the company and how much the shareholders or partners actually own. Equity is derived by deducting total liabilities from the total assets. It therefore represents the residual interest in the business that belongs to the owners.
Equity is usually presented in the statement of financial position under the following categories:
o   Share capital represents the amount invested by the owners in the entity
o   Retained Earnings comprises the total net profit or loss retained in the business after distribution to the owners in the form of dividends.
o   Revaluation Reserve contains the net surplus of any upward revaluation of property, plant and equipment recognized directly in equity.

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