Difference between balance sheet and statement of affairs?

Question

Answer

Statement of Affairs is a statement showing assets, liabilities and capital of the entity prepared on the basis of a single entry system of bookkeeping. A Balance Sheet is a statement showing assets, liabilities and equity of the company prepared on the basis of the double entry system of bookkeeping.

Answer

Balance Sheet vs. Statement of Affairs: Key Differences

Balance sheet and statement of affairs are two important financial statements used by businesses to report their financial position. Although both statements provide information about a company's assets, liabilities and equity, there are some key differences between them. Here are the main differences:

Definition: A balance sheet is a financial statement that reports a company's assets, liabilities, and equity at a specific point in time. A statement of affairs, on the other hand, is a statement that reports a company's assets, liabilities, and equity at the time of its liquidation or dissolution.

Timing: A balance sheet is prepared at the end of an accounting period, typically on a quarterly or annual basis, while a statement of affairs is prepared when a company is being wound up or dissolved.

Objective: The objective of a balance sheet is to provide a snapshot of a company's financial position and to help stakeholders understand its financial health. The objective of a statement of affairs, on the other hand, is to provide a summary of a company's assets and liabilities in order to determine how they will be distributed among creditors and shareholders in the event of liquidation or dissolution.

Format: A balance sheet is typically presented in a vertical format, with assets listed on one side and liabilities and equity listed on the other side. A statement of affairs, on the other hand, is typically presented in a horizontal format, with assets listed on one side and liabilities listed on the other side.

Valuation: The assets and liabilities listed on a balance sheet are valued at their fair market value, while the assets and liabilities listed on a statement of affairs are typically valued at their book value.

Conclusion

While both balance sheet and statement of affairs provide information about a company's financial position, they are prepared for different purposes and at different times. It is important for businesses to understand these key differences in order to use these financial statements effectively and make informed decisions about their financial health.

Answer

Balance Sheet(1) It is prepared on the basis of double entry system.(2) It is prepared to show the financial position of the concern.(3) Values of assets and liabilities in a balance sheet are based on ledger balances.(4) Omission of assets and liabilities can easily be found out when balance disagrees.Statement of Affairs(1) It is prepared on the basis of information from incomplete records.(2) It is usually prepared to find out capital.(3) Values of assets and liabilities in a Statement of Affairs are based on estimates.(4) It is difficult to find out the omission of assets and liabilities in Statement of Affairs.

Answer

Thank you for your valuable answer.

Answer

Balance sheet tell accurate profit of business, Statements of affairs does not tell accurate profit

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