What is the Statement of Financial Position - Definition - Meaning - Explanation

It is a Statement of Assets, Liabilities and Equity to show the positions of balances these three Types of Accounts (Permanent Accounts) on a particular time of a specified date. It is also known as Balance Sheet which is renamed to Statement of Financial Position according to new International Financial Reporting Standards.

This statement has two sides. One side is named as Assets Side and other side is known as Liabilities & Equity Side. Both of these sides must be equal in monetary value, otherwise this statement is not correct and accurate and does not provide true & fair view of financial information about Assets, Liabilities and Equity to the Users of Financial Statements. This statement actually shows the verification of Accounting Equation that is Assets = Liabilities + Equity.

At the end of each accounting period, this statement is the part of Financial Reports and distributed to shareholders or owners of the business annually.