Prepare a budgeted statement of financial position
Forecast assets, liabilities and equity at a future date using balances from the linked schedules.
Cambridge International AS & A Level Accounting 9706, 2026–2028 syllabus, Version 2. Topic 4.3 covers budgetary control, linked master-budget schedules, spreadsheets, limiting factors, flexible budgets, reconciliations, behavioural effects and supported decisions. Practice is self-checked, not an official Cambridge grade. Full timed Papers 1–4 and human subject-teacher review remain outstanding.
Before you begin
- Use AS Topics 2.1–2.2 for cost behaviour, contribution and budgeting foundations. For each schedule, label the period, units, price, inventory policy, timing assumptions and opening balance before calculating.
Work on paper. Try each question before revealing help, and explain why your method works.
Quick readiness check
Which schedule usually provides closing cash for the statement of financial position?
What you will learn
- Derive closing balances from budget schedules
- Apply the accounting equation
- Check consistency with cash and profit budgets
Use closing balances, not period totals
A budgeted statement of financial position estimates assets, liabilities and equity at a future date. Use closing cash from the cash budget, closing inventory from the stock policy, receivables from collection assumptions and payables from purchase and payment schedules.
Non-current assets should reflect planned purchases and the depreciation treatment supplied. Equity may include opening capital, budgeted retained profit and drawings or dividends if stated; loans and other obligations belong in liabilities.
Reconcile the equation and linked schedules
Assets = liabilities + equity. The equation is a check on the budget, not proof that every assumption is sound; an omitted balance or classification error can still produce plausible totals.
If the statement does not balance, trace each schedule and movement. Check profit and inventory, cash receipts and payments, credit balances, finance, depreciation and owner transactions rather than inserting an unexplained balancing figure.
Pause and explain
Assets are $82,000 and equity $61,500. What are liabilities?
Worked example
Budgeted assets are $145,000 and liabilities $52,000. Calculate equity and verify the equation.
Show the worked solution
- Equity = assets − liabilities = 145,000 − 52,000.
- Equity = $93,000.
- Check: 145,000 = 52,000 + 93,000.
Answer Equity is $93,000 and the statement balances at $145,000 on each side.
Try a topic test
Choose Easy, Normal or Difficult. Save your answers and open worked review after finishing.
Test this topic →From guided practice to a new situation
Write your answer and reasoning first. Use a hint only if you are stuck. The model solution is for self-checking; your written work is not automatically marked.
Closing inventory is $12,000, receivables $8,000, cash $5,000 and non-current assets $40,000. Liabilities are $22,000. Find equity.
Give me a hint
Total the listed assets, then subtract liabilities.
Compare my reasoning
- Assets = 12,000 + 8,000 + 5,000 + 40,000 = $65,000.
- Equity = 65,000 − 22,000.
- Equity = $43,000.
Budgeted equity is $43,000.
Look for these in your work
- Assets total correct
- Liabilities subtracted
- Equity correct
Opening equity is $60,000; budgeted profit is $8,000; drawings are $6,000. Non-current assets $60,000, inventory $16,000, receivables $9,000, cash $4,000, payables $12,000 and loan $15,000. Calculate closing equity and check the statement.
Give me a hint
Update equity for profit and drawings, then total the position.
Compare my reasoning
- Closing equity = 60,000 + 8,000 − 6,000 = $62,000.
- Assets = 60,000 + 16,000 + 9,000 + 4,000 = $89,000.
- Liabilities + equity = 12,000 + 15,000 + 62,000 = $89,000; both sides agree.
Closing equity is $62,000; assets and liabilities plus equity both total $89,000.
Look for these in your work
- Equity movement correct
- Assets total correct
- Statement balances
A draft budgeted statement balances only after inserting 'other asset' of $18,000 with no supporting schedule. What should the accountant do?
Give me a hint
Treat the plug as an unresolved difference, not a verified asset.
Compare my reasoning
- Identify the underlying transaction or balance that would create the asset.
- Trace linked schedules and supporting records to find the omission or error.
- Revise the budget and disclose any unresolved assumption before approval.
Do not accept an unsupported balancing asset. Find the source in the linked schedules or record the statement as unreconciled pending evidence.
Look for these in your work
- Unsupported item challenged
- Source investigation specified
- Approval conditional on evidence
Common mistakes
- Using opening balances when closing balances are required
- Adding profit directly to cash
- Forcing the statement to balance with an unexplained figure
What can you explain now?
What relationship should a budgeted statement of financial position satisfy?
Compare with the explanation
Assets = liabilities + equity
Assets are financed by liabilities and equity, so the equation must balance.
After trying it yourself, choose your next review. This is your self-assessment.
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Make it stick
Name three balances that should come from linked schedules and state the balance-sheet equation.
If you needed the solution, close it and solve the problem again from a blank page. A correct answer is stronger when you can explain the reason for each step.