Statement of financial position
| English | Chinese | Pinyin |
|---|---|---|
| statement of financial position | 财务状况表 | cái wù zhuàng kuàng biǎo |
| assets | 资产 | zī chǎn |
| liabilities | 负债 | fù zhài |
| equity | 所有者权益 | suǒ yǒu zhě quán yì |
| non-current assets | 非流动资产 | fēi liú dòng zī chǎn |
| current assets | 流动资产 | liú dòng zī chǎn |
| debtors | 应收账款 | yīng shōu zhàng kuǎn |
| balance sheet | 资产负债表 | zī chǎn fù zhài biǎo |
What the business owns and owes
- The income statement shows profit over a year; the statement of financial position 财务状况表 shows what the business owns and owes at a single moment.
- It is a snapshot of the firm's wealth.
Financial statements flow
See how business events become the statements users read.
Which is an asset?
Assets are what the business owns; the others are liabilities.
A bank loan that the business must repay is an example of a ______.
Liabilities are what the business owes.
Assets 资产, liabilities 负债 and equity 所有者权益
- Assets: what the business owns (buildings, machinery, stock, cash).
- Liabilities: what it owes (loans, money owed to suppliers).
- Equity: the owners' stake in the business.
The statement of financial position balances: assets equal liabilities plus equity
A business owns assets of 90 and owes liabilities of 55. What is the equity?
Equity = assets − liabilities = 90 − 55 = 35.
Which is a current asset?
Cash is a current asset; buildings and machinery are non-current.
Current vs non-current
- Non-current assets 非流动资产 (machines, buildings) last more than a year.
- Current assets 流动资产 (cash, stock, debtors 应收账款) are short-term.
- Liabilities split the same way: current (≤1 year) and non-current (long-term).
Worked example. A firm owns assets worth 120 and owes liabilities of 70. The owners' equity = 120 − 70 = 50 — the value belonging to the owners.
On the statement of financial position, assets always equal liabilities plus equity.
It always balances — hence "balance sheet".
It always balances
- The statement always balances: assets = liabilities + equity.
- This is why it used to be called the balance sheet 资产负债表.
A balance sheet is a snapshot, not a film. It shows the position on one specific day. The very next day, as cash and stock change, the figures are already different.
You've got it
- assets = what you own; liabilities = what you owe; equity = the owners' stake
- assets and liabilities split into current (≤1 year) and non-current
- it always balances: assets = liabilities + equity (a snapshot in time)