Specimen of Statement of Affairs and Deficiency Account

Statement of Affairs:
A Statement of Affairs is a summary of a company's assets and liabilities at a specific point in time. It is prepared to determine the company's net worth or to assist in a bankruptcy proceeding. Here is a specimen of a Statement of Affairs:

XYZ Company Statement of Affairs as of December 31, 2021

Asset Amount
Cash $10,000
Accounts Receivable $20,000
Inventory $30,000
Equipment $50,000
Total Assets $110,000

Liability Amount
Accounts Payable $40,000
Bank Loan $30,000
Total Liability $70,000

Net Worth $40,000

Deficiency Account:
A Deficiency Account is a statement that shows the deficiency amount or the amount by which the total liabilities exceed the total assets of a company. It is prepared to determine the shortfall that needs to be made up by the company's owners or investors. Here is a specimen of a Deficiency Account:

XYZ Company Deficiency Account as of December 31, 2021

Liability Amount
Accounts Payable $40,000
Bank Loan $30,000
Total Liability $70,000

Asset Amount
Cash $10,000
Accounts Receivable $20,000
Inventory $30,000
Equipment $50,000
Total Assets $110,000

Deficiency $40,000

Explanation:
The Statement of Affairs is an important financial document that lists a company's assets and liabilities. It is useful in determining the company's net worth or to assist in a bankruptcy proceeding. In the above example, XYZ Company has $110,000 in assets and $70,000 in liabilities, resulting in a net worth of $40,000.

The Deficiency Account, on the other hand, is prepared to determine the amount by which the total liabilities exceed the total assets of a company. In the above example, XYZ Company has a deficiency of $40,000, which means that the company's owners or investors need to make up this shortfall in order to cover the company's liabilities.

Conclusion:
A Statement of Affairs and Deficiency Account are important financial documents that provide valuable insights into a company's financial health. These documents are useful in determining a company's net worth and identifying any potential financial shortfalls that need to be addressed.