Understand how a statement of financial position is prepared and used by different decision makers.

* A statement of financial position reports the resources (assets) owned by a company and the claims against those resources (liabilities and shareholders’ equity) at a specific point in time.

° These elements are related by the fundamental accounting equation:

Assets = Liabilities + Shareholders’ equity.

* To help users identify the fundamental economic similarities and differences between the various items on the statement of financial position, assets and liabilities are classified as either current or noncurrent (long term). Shareholders’ equity is classified as either contributed capital or retained earnings.