Question
The following balances remain on the books of Harbor Cafe Ltd. after the accounts were closed at December 31, 2025 (alphabetical order):
| Accounts Payable | $4,200 |
| Accounts Receivable | $4,800 |
| Bank Loan (repayable 2030) | $15,000 |
| Cash | $7,500 |
| Equipment | $28,000 |
| Inventory | $6,500 |
| Motor Vehicles | $12,000 |
| Ordinary Shares | $30,000 |
| Prepaid Insurance | $1,200 |
| Retained Earnings | $9,000 |
| Salaries Payable | $1,800 |
Required: Prepare the classified Statement of Financial Position at December 31, 2025 in the order Non-Current Assets → Current Assets, then Equity, then Non-Current Liabilities → Current Liabilities. Show a subtotal for each group and prove that Total Assets = Total Equity and Liabilities.
The totals are rows you type yourself — they are marked like any other line. Your statement needs these eight:
- Total Non-Current Assets and Total Current Assets, then Total Assets
- Total Equity
- Total Non-Current Liabilities and Total Current Liabilities, then Total Liabilities
- Total Equity and Liabilities — the last line, equal to Total Assets
Start each group with a heading row (e.g. Non-Current Assets), list its balances underneath, then its total.
Scoring
- 40% Account naming / line matching
- 40% Amount correctness
- 20% Structure / section placement
IAS 1 — Presentation of Financial Statements
Work the cycle in its fixed order: journalise, post to the ledger, extract an unadjusted trial balance, pass adjusting entries, extract an adjusted trial balance, prepare the statements, then close the temporary accounts. Each step consumes the output of the one before it, so an error early on propagates all the way to the closing entries rather than staying local.
Common mistakes
- Preparing the financial statements from the unadjusted trial balance instead of the adjusted one.
- Closing permanent accounts — assets, liabilities and capital carry forward; only revenue, expense and drawings/dividends close.
- Forgetting that the post-closing trial balance should contain no income statement accounts at all.
Further readingIAS 1: what goes where in a full set of statements