STATEMENT OF AFFAIRS AND BALANCE SHEET DIFFERENCE

The Statement of Affairs and Balance Sheet are different names of records of assets and liabilities maintained by the different kinds of business organisation. It is necessary to know the Statement of Affairs and Balance Sheet difference to understand their meaning and adoption.

BALANCE SHEET

Balance Sheet is a statement which is prepared by the business houses to show the financial position of the concern at the end of the year. It contains the information regarding the assets, liabilities and capital invested in the business and prepared for the particular financial year. It shows the liquidity position, profitability position and the solvency position of the business house. The total of balance sheet is always equal. The format of Balance Sheet is as under:

STATEMENT OF AFFAIRS

Statement of Affairs is a statement, which shows assets on one side and the liabilities on the other on a particular date. The difference between the both sides is taken as capital. It is virtually a balance sheet of the concern prepared under single entry system. The format of Statement of Affairs is as follows:

STATEMENT OF AFFAIRS AND BALANCE SHEET DIFFERENCE

The Statement of Affairs and Balance Sheet difference is as follows:

BASIS OF DIFFERENCE	BALANCE SHEET	STATEMENT OF AFFAIRS
DOUBLE/SINGLE ENTRY SYSTEM	It is prepared on the basis of books kept on double entry basis.	It is prepared on the basis of books kept on single entry system.
BASIS  OF PREPARATION	It is based on the completely true and reliable data.	It is based on the balances of accounts, calculations, valuations, information and enquiry.
PURPOSE	Its purpose is to see the financial position.	Its purpose is to find out the capital
TRIAL BALANCE	Trial balance is prepared before preparing it.	Trial balance is not prepared before finding out the profit or loss.
CAPITAL	Capital is taken from the capital account in the ledger.	Excess of assets over liabilities is treated as capital
LEGAL RECOGNITION	Balance sheet can be presented in the court of law as evidence in case of disputes.	Statement of affairs is not accepted as evidence in the court of the law.
SUITABILITY	Balance sheet is suitable for all types of business being a part of scientific system.	Statement of is only maintained by the small or medium enterprises whom do not understand the importance of scientific system of accounting
TIMING OF PREPARATION	Balance sheet is prepared after the preparation of Profit and Loss Account	Statement of affairs is prepared before the preparation of statement of profit and loss.
DISAGREEMENT	Disagreement of the Balance Sheet indicates some omission or commission which can be rectified.	There is no question of agreement of the statement of affairs. The difference in amounts to capital. Hence omissions and commissions cannot be rectified.
VALUATION OF ASSETS AND LIABILITIES	The value of assets and liabilities shown in the balance sheet are those which are recorded in the ledger.	The value of assets and liabilities shown in the statement of affairs are mere estimates.
INFORMATION ABOUT CAPITAL	Balance sheet contains information about capital from accounting records.	In statement of affairs, capital is taken as balancing figures, being the difference between total assets and total liabilities.
ESTIMATION OF TRUE FINANCIAL POSITION	Balance Sheet shows the true financial position of a concern on particular date.	Statement of affairs shows estimated financial position of a concern on a particular date.
ARITHMETICAL ACCURACY	The tallying of balance sheet implies arithmetical accuracy of accounting books as it is prepared on the basis of trial balance.	The statement of affairs does not prove the arithmetical accuracy of accounting books as it is not prepared on the basis of trial balance.
RELIABILITY	Balance sheet is regarded as more reliable as it is based on double entry principles.	It is regarded as less reliable as it is based on incomplete records and estimates.
FOOTNOTES	Footnotes are prepared at the end of the Balance Sheet.	No footnotes are prepared at the end of Statement of Affairs.

Also Study	Also Study	Also Study	Also Study
Accounting	Non profit organisation	Depreciation	Liquidity ratios
Nature of Accounting	Receipts and Payments Account	Depreciation Accounting	Acid Test Ratio
Benefits of Accounting	Scope of accounting	Hire Purchase Accounting	Cash Ratio
Difference between cost accounting and financial accounting	Financial accounting, cost accounting and management accounting	Difference between hire purchase and instalment system	Financial ratio analysis
Difference between transaction and event	Transactions	Users of Accounting	Ratio analysis
Limitation of Accounting	Capital Expenditure	Instalment System	Difference between consignment and sale
Book Keeping	Revenue Expenditure	Reserves Accounting	Abnormal loss vs normal loss in consignment
Accountancy	Difference between capital and revenue expenditure	Provisions	Treatment of loss on consignment
Accounting as science or an art	Accounting Equation	Single entry system	Accounting treatment of consignment
Book Keeping vs accounting	Deferred Revenue Expenditure	Difference between statement of affairs and balance sheet	Joint venture vs consignment
Book keeping vs accountancy	Capital receipt	IFRS	Departmental Accounting
Accounting vs accountancy	Revenue receipt	Balance Sheet	Methods of departmental accounting
Basis of Accounting	Difference between capital and revenue receipt	Profit and loss Account	Allocation of expenses in departmental accounting
Branches of accounting	Difference between accounting concepts and conventions	Trading Account	Inter-departmental transfers
Cash and mercantile system of accounting	Accounting Standards	Voyage Account	Different types of branches
Accounting Principles	Objectives of Accounting	Accounting for Incomplete Voyage	Departmental vs Branch accounting
Golden ru les of accounting	Process of Accounting	Joint venture	Methods of branch accounting
Double entry system of book keeping	Scope of Accounting	Joint Venture Vs Partnership	Incorporation of branch trial balance
Double entry vs Single entry system	Accounting Concepts vs Accounting conventions	Methods of recording transactions in Joint Venture	Garner VS Murray Rule
History of Accounting	Difference between provisions and reserves	Consignment