Financial position statement, Accounting Standards

Currently I can represent my financial position in the subsequent form:

                                          Financial Position Statement 1

    Amount owned by me                                   Things of value owned by me

 

Rs.

 

Rs.

Personal loan from friend

1,00,000

Balance with bank

3,50,000

Own claim or net worth

9,00,000

Fixed deposits

1,50,000

 

 

Other personal belongings

5,00,000

 

10,00,000

 

10,00,000

Here then the bank grants me the advance (loan) of Rs. 5,00,000 and I buy the car for Rs.8,00,000. Then after purchase of the car my financial position statement will change as given as:

Financial Position Statement 2

Claims against things of value                                       Things of value owned

Rs.                                                                                Rs.

Personal loan from friend      1,00,000                              Balance with bank                    50,000

Mortgage loan from bank      5,00,000                               Fixed deposit                          1,50,000

Own claim or net worth         9,00,000                               Car                                         8,00,000

Other personal belongings     5,00,000

---------                                                        ------

15,00,000                                                                           15,00,000

Currently, as a result of this transaction my worth has raised start at Rs. 10,00,000 to Rs.15,00,000. Though, as there is also an equal raise in claims against my worth in the form of mortgage loan from the bank, my net worth keeps similar.

 Things of monetary value possessed through an entity are concerned to as assets. Accountants utilize the term assets to explain things of value measurable in monetary terms.

The amount owed through an entity or individual that represent claims against it or his assets through outsiders are responsibilities. This is the claims of outsiders that are legally enforceable claims against an individual or entity which are termed to as liabilities.

The assets owned through the entity, fewer liabilities or outsider's claims are the net worth. As the net worth signifies the claims of owners in case of an entity, this is considered to as owner's equity.

Currently we can understand about the financial position statement is a summary of the assets,liabilitiesand net worth of a firm at an exact point in time.

Posted Date: 4/3/2013 6:28:19 AM | Location : United States







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