Question

Difference between statement of affairs and balance sheet

Answer 1

Answer:

Statement of affairs :

Small traders and partnership firms, do not maintain their books of accounts as per double entry system. They used to keep a track of cash and credit transactions only. However, at the end of the financial year, these firms also want to know the position of business. For this purpose, statement of affairs is prepared at the beginning and at the ends of the period, so as to determine the overall change in the capital, during the financial year...

Balance Sheet :

.Statement of affairs is often confused with Balance Sheet, as it also lists out assets and liabilities of the company. Balance Sheet exhibits the position of business, at a given date.

There are some noteworthy differences between the statement of affairs and balance sheet, in the sense that the former is prepared from incomplete records whereas the latter is prepared from proper records maintained as per of double entry system. Some more differences between these two statements are shown here in tabular form.

Answer 2

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Statement of Affairs is a statement showing assets, liabilities and capital of the entity prepared on the basis of a single entry system of bookkeeping. A Balance Sheet is a statement showing assets, liabilities and equity of the company prepared on the basis of the double entry system of bookkeeping