Distinguish
between statement of affairs and balance sheet.
Distinguish between statement of affairs and balance sheet.
Difference between Statement of Affairs
and Balance Sheet
Basis of Difference
Statement of Affairs
Balance Sheet
Objective
It is prepared to determine the amount of capital at a particular
date.
It is prepared to ascertain the true financial position.
Reliability
It is based on estimates; hence, it is less reliable.
It is based on sophisticated and well developed principles; hence, it
is more reliable.
Accounting Method
It is prepared from incomplete records of business transactions under
single entry system.
It is prepared when accounts are maintained under double entry system.
Omission
Omission of assets and liabilities cannot be easily
identified.
Omission of assets and liabilities can be easily identified, as
omission will lead to mismatch of either sides of the balance sheet.
|
Difference between Statement of Affairs and Balance Sheet
|
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|
Basis of Difference |
Statement of Affairs |
Balance Sheet |
|
Objective |
It is prepared to determine the amount of capital at a particular date. |
It is prepared to ascertain the true financial position. |
|
Reliability |
It is based on estimates; hence, it is less reliable. |
It is based on sophisticated and well developed principles; hence, it is more reliable. |
|
Accounting Method |
It is prepared from incomplete records of business transactions under single entry system. |
It is prepared when accounts are maintained under double entry system. |
|
Omission |
Omission of assets and liabilities cannot be easily identified. |
Omission of assets and liabilities can be easily identified, as omission will lead to mismatch of either sides of the balance sheet. |
