Question

What is meant by a ‘statement of affairs’? How can the profit or loss of a
trader be ascertained with the help of a statement of affairs?

Answer 1

Statement of Affairs

Explanation:

• A statement of affairs is a single entry financial statement that displays assets and liabilities, but it's not as detailed as the balance sheet.
• Under this approach, a trader may calculate its profit or loss for a given period by comparing the capital at the start of the period with the capital at the end of the period. Two comparative statements of affairs are prepared for this reason, one at the beginning giving the capital and the other at the end of the period.