Question
State three points of difference between Statement of Affairs and Balance Sheet.
✓
Answer
Difference between Balance Sheet and Statement of Affairs Basis Balance Sheet:
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S.No.
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Basic
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Balance Sheet
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Statement of Affairs
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1.
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Objective
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The main objective of preparing Balance Sheet is to know about the financial poistion of the business.
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The main objective of preparing Statement of Affairs is to know about capital at a point of time.
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2.
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Accounting System
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Balance sheet is prepared when accounts are maintained under Double Entry System.
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Statement of Affairs is prepared when account are maintained under Single Entry System.
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3.
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Accounts and Information
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This is prepared exclusively on the basis of ledger accounts.
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In view of income accounts, its preparation is based on limited accounts, calculation, estimates and other information.
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4.
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Reliability
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Being based on actual figures, Balance Sheet is regarded as a reliable statement.
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Since it is based on the accounts and partly on other information and one's memory, hence, it is not regarded as areliable statement.
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5.
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Trial Balance
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Trial Balance is prepared before Balance Sheet is prepared.
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In the case of statement of Affairs, Trial Balance is not prepared.
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adjustmnet:
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