Difference Between Balance Sheet And Statement Of Affairs
The main dissimilarities or difference between balance sheet and statement of affairs can be pointed out as follows:
1. Meaning
Balance Sheet: Statement prepared to show the value of assets and liabilities of business in order to check the financial strength.
Statement Of Affairs: Statement prepared to show capital, liabilities and assets to find out opening or closing capital.
2. Objective
Balance Sheet: The main objective of balance sheet is to reveal the financial position of the business firm.
Statement Of Affairs: Its objective is to know the opening capital or closing capital.
3. Based On
Balance Sheet: It is based on the double entry system of bookkeeping.
Statement Of Affairs: It is based on the single entry bookkeeping system.
4. Relation With Financial Statement
Balance Sheet: It is an integral part of financial statement.
Statement Of Affairs: It has no relation with financial statement.
5. Fictitious Assets
Balance Sheet: Fictitious assets like prepaid expenses and goodwill of the firm are included in balance sheet.
Statement Of Affairs: It does not include such fictitious assets.
6. Arithmetical Accuracy
Balance Sheet: It ensures arithmetical accuracy because it is based on trial balance.
Statement Of Affairs: It is not based on trial balance. So, arithmetical accuracy is not possible.
7. Reliability
Balance Sheet: It is more reliable because it shows actual value of assets and liabilities.
Statement Of Affairs: It is not reliable as it shows estimated values of capital, assets and liabilities.
8. Value Of Asset
Balance Sheet: It shows only the book value of assets.
Statement Of Affairs: It shows both book value and market value of assets.
Also Read:
Also Read:
9. Tax Purpose
Balance Sheet: It is accepted by the tax authorities.
Statement Of Affairs: It cannot be used for tax purpose because it is not accepted bu tax authorities.
10. Legal Evidence
Balance Sheet: It may be used as legal evidence and can be presented in the court.
Statement Of Affairs: It cannot be presented as legal evidence.
Balance Sheet Vs Statement Of Affairs (Comparison Chart)
I hope this post is helpful to understand the difference between balance sheet and statement of affairs and to make comparison between them.
Balance Sheet Vs Statement Of Affairs (Comparison Chart)
Basis For Difference
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Balance Sheet
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Statement Of Affairs
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Introduction
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Statement that shows assets and liabilities of the firm
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Statement that shows capital, liabilities and assets and finds out opening or closing capital
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Purpose/Objective
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To show the financial position of the firm
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To know the opening capital or closing capital
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Based On
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Double entry system
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Single entry system
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Relation With Financial Statement
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Yes
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No
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Fictitious Assets Included ?
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Yes
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No
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Arithmetical Accuracy
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Yes
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No
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Reliability
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More
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Less
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Value Of Assets
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Includes only book value
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Includes both book value and market value
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Used For Tax Purpose ?
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Yes
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No
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Legal Evidence
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Yes
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No
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I hope this post is helpful to understand the difference between balance sheet and statement of affairs and to make comparison between them.
