Balance Sheet and Statement of Affairs
Both balance sheet and statement of affairs show the financial position of a business on a particular date. However, they differ from each other in several ways:
(i) A balance sheet is prepared from the Trial Balance extracted on the basis of ledger accounts. While a statement of affairs is prepared from ledger accounts and several additional information available from other sources.
(u) Balance sheetis assumed to show the true financial position of the business while it may not be the case in case of statement of affairs.
(iii) The omissions of assets and liabilities cannot be easily traced in a statement of affairs while such omissions can be traced in a balance sheet.
(iv) A balance sheet is basically prepared to show the financial position of a business on a particular date. While a statement of affairs helps in ascertaining not only the financial position but also the profit made by the business during a particular period.
(v) The capital account balance shown in the balance sheet is taken from the ledger. While the capital account balance in case of a statement of affairs is the excess of assets over liabilities on a particular date.