Difference Between Statement of Affairs and Balance Sheet:
Learning Objectives:
-
What is the difference between statement of
affairs and balance sheet?
As real or property accounts are not
maintained and also because a capital account does not exist under the
single entry system, a balance sheet cannot be prepares in the same way as
is done under the
double entry system. However, in order to have an idea
about the financial position on a particular date information concerning the
available assets and liabilities is gathered and a statement is prepared
setting in it assets and liabilities on the date; this statement is called a
statement of affairs. The assets and liabilities are set out in the form of
a balance sheet. The excess of assets over liabilities is shown as capital.
Balance sheet and statement of affairs may be
distinguished as follows:
|
Statement of Affairs |
Balance Sheet |
|
(1) |
It is a statement of assets and liabilities (including capital) prepared
under the single entry system |
(1) |
It is statement of assets and liabilities (including capital) prepared
under the double entry system. |
|
(2) |
It is prepared partly from a trader's books, partly from other sources
of information and sometimes from memory |
(2) |
It is prepared with data available from the books of accounts only. |
|
(3) |
It is compiled from an incomplete books and information, the accuracy of
which cannot be relied upon |
(3) |
It is prepared from a set of books kept according to the double entry
system, the arithmetical accuracy of which can be proved. |
|
