Differences Between Balance Sheet And Statement Of Affairs

Following are the main differences between balance sheet and statement of affairs:

1.Basis

Balance sheet is prepared on the basis of double entry system of book keeping. Statement of affairs is prepared on the basis of incomplete records.

2. Purpose

Balance sheet is prepared to present financial position of the business. Statement of affairs is prepared to find out either the amount of opening capital or closing capital.

3. Financial Position

Balance sheet shows the true financial position of the business. Statement of affairs does not show the true financial position of the business.

4. Stage Of Preparation

Balance sheet is prepared at the final stage of accounting procedure. Statement of affairs is not prepared at the final stage of the accounting procedure.It is prepared before the preparation of statement of profit or loss.