Difference between Balance Sheet and Statement of Affairs

Balance sheet and statement of affairs both show the list of assets and liabilities. Both are correct if our total assets are matched with total liabilities. But still there are lots of differences between balance sheet and statement of affairs which we will explain below.

Basis of Difference		Balance Sheet		Statement of Affairs
1. Objective		Main objective of making balance sheet is to show the financial position of any organisation.		Main objective of making statement of affairs to find the opening and closing capital in single entry system and in the liquidation of company, to find surplus or deficiency on the basis of estimated value of assets and liabilities of company.
2. System of Book Keeping		It follows double entry system of book keeping		It follows the single entry system of book keeping.
3. Arithmetical Correctness		When balance sheet's both side are matched, it means, it shows also the arithmetical correctness. Because it is prepared from trial balance and trial balance is prepared from the balance of ledger accounts.		It does not prove the arithmetical correctness because it is prepared just information of accounting record. It is not prepared on the basis of trial balance.
4.  Actual and Estimated Value		All assets and liabilities are shown on the actual value.		All assets and liabilities are shown on the basis of estimation.
5. Finding of Mistake		If we forget to show any asset or liability, our balance sheet will not match. With this, we can find the mistake.		Because all the assets and liabilities are shown on our past estimation, so, if we forget any asset or liability, we can not find from statement of affair because due to wrong estimation, we can show less or more value of asset or liability.
6. Proof in Court		Court accepts balance sheet as proof of valid information.		Court does not accept it as proof of financial position of organisation because there is chance of wrong estimation of assets and liabilities.

Related : How to Prepare Statement of Affairs

Related Resources :

• Difference Between Similar Terms
• Class 11th Accountancy Notes