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It may seem strange to you to learn that statements of financial position are not part of the double entry system． When accounts such as the cash account， rent account， sales account，trading and profit and loss account and so on are drawn up， entries are made on the debit and credit side of these accounts since they are part of the double entry system．
When preparing a statement of financial position， no entries are made in any of the various accounts． We do not actually transfer the ‘Fixtures and fittings balance’ or the ‘Accounts receivable balance’， or any of the other accounts， to the statements of financial position． All that is necessary is to list the balances for assets， capital and liabilities to form a statement of financial position． This means that none of these accounts have been closed off． Nothing is entered in the accounts．
When the next accounting period starts， these accounts contain balances which are brought forward as‘opening balances’． During the next accounting period， business transactions are then entered into these accounts as part of the normal double entry system．
If you see the word ‘account’， you will know that what you are looking at is part of the double entry system and will include debit and credit entries． If the word ‘ account’ is not used， it is not part of double entry． For instance， the following items are not ‘accounts’， and are therefore not part of the double entry：
·Trial balance： this is a list of the debit and credit balances in the accounts．
·Statement of profit or loss： this is a list of revenues and expenditures arranged so as to produce figures for gross profit and net profit for a specific period of time．
·Statement of financial position： this is a list of balances arranged according to whether they are assets， capital or liabilities and so depict the financial situation on a specific date．