A Structured Approach to Preparation of the Statement of Changes in Financial Position.

Abstract

A logical, non-mechanical approach to the preparation of the Statement of Changes in Financial Position (SCFP) Is presented. A question-answer flowchart approach determines if and how an event is to be disclosed in the SCFP, and the order of information search. Both working capital and cash statement preparation are discussed. The approach is primarily pedagogical and emphasizes the economic substance of particular events while reinforcing substantive financial accounting knowledge. The elements of the approach are applicable to the interpretation and preparation of actual statements.