Question

Distinguish between statement of affairs and balance sheet.

Answer 1

The difference is that statement of affairs is not a part of financial statement while balance sheet is a part of financial statement.

Explanation:

Statement of affairs is made to determine the changes in the amount of capital. This statement is prepared at the starting and ending of the financial period.

Balance sheet is a statement that shows the balance of liabilities and assets.  

The differences between statement of affairs and balance sheet are:

i. The statement of affairs is not a part of financial statement while balance sheet is a part of financial statement.

ii. Statement of affairs determines the opening and closing capital. On the contrary, balance sheet shows financial position of the business.