Distinction between Statement of Affairs and Balance Sheet :
Statement of affairs which looks like a balance sheet differs from the balance sheet in the following respects.
Basis of Distinction |
Balance Sheet |
Statement of Affairs |
1. Objectives | To Know the fmancial position of the business | To find out the capital of business |
2. Accounting method | When accounting is maintained under double entry system, balance sheet is prepared | Statement of affairs is prepared when accounts are maintained under single entry system of accounting |
3. Basis of preparation | It is prepared exclu- -sively on the basis of ledger accounts | It is prepared on the basis of some ledger accounts and estimates. |
4. Reliability | It is regarded as a reliable statement | It is not regarded as reliable. |
5. Missing of Facts | Since both the aspects of all transactions are duly recorded, no chance for missing of facts. | There remains always a possibility for missing of facts, because the accounts are incomplete. |