Question
The following account balances were taken from the records of Larkfield Consulting at June 30, 2025. Equipment is shown at its carrying amount (net of depreciation).
| Account | Amount |
|---|
| Cash | $12,400 |
| Accounts Receivable | 6,900 |
| Supplies | 1,200 |
| Prepaid Insurance | 1,500 |
| Equipment (carrying amount) | 14,000 |
| Accounts Payable | 4,200 |
| Salaries and Wages Payable | 1,000 |
| Unearned Service Revenue | 1,500 |
| Share Capital - Ordinary | 20,000 |
| Retained Earnings | 9,300 |
Required: Prepare a classified statement of financial position at June 30, 2025. Group the assets into current assets and property, plant, and equipment, and show the liabilities as current liabilities. Remember that amounts received from customers for services not yet performed are a liability.
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