Class 11 Accountancy - Chapter Accounts from Incomplete Records NCERT Solutions | Distinguish between statement of affairs
Distinguish between statement of affairs and balance sheet.
| Basic of Difference | Balance Sheet | Statement of Affairs |
|---|---|---|
| 1. Double Entry | It is prepared with the list of ledger balances drawn from the books of accounts kept on the basis of double entry. | It is not prepared with the list of ledger balances but with such information as is available from the accounting records kept on the basis of single entry. |
| 2. Arithmetical Accuracy | The tallying of balance sheet proves arithmetical accuracy of accounting books because it is prepared on the basis of a trial balance. | A statement of Affairs does not prove the arithmetical accuracy of accounting books because it is not prepared on the basis of a trial balance. |
| 3. Value of Assets and Liabilities | The values of assets and liabilities shown in a Balance Sheet are the actual values based on ledger accounts. | The values of assets and liabilities shown in the statement of Affairs are merely the estimates based on physical inspection. |
| 4. Object | It is prepared for ascertaining the financial position of a business. | It is prepared for ascertaining the capital of a business. |
| 5. Omission of an Asset or a Liability | If an asset or liability is omitted while preparing a Balance Sheet, it will be easily detected because the Balance Sheet will not tally. | If an asset or liability is omitted while preparing a statement of affairs, it cannot be easily detected. |
| 6. Reliability | A Balance Sheet is treated as more reliable because it is based on double entry principles. | It is treated as less reliable because it is based on incomplete records and estimates. |
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2. Excess of .......... over ......... represents loss sustained during the period.
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If opening capital is Rs. 60,000, drawings Rs. 5,000, capital introduced during the period Rs. 10,000, closing capital Rs. 90,000. The value of profit earned during the period will be :
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What is meant by a ‘statement of affairs’? How can the profit or loss of a trader be ascertained with the help of a statement of affairs?
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