Difference between Statement of Affair and Balance Sheet

What are the major differences between Statement of Affair and Balance Sheet?

Have you ever heard of a statement of affairs and a balance sheet? These are two important financial documents that help people understand a company’s financial situation.

The Main difference is a statement of affairs shows a company’s financial position at a specific point in time while a balance sheet shows the financial position of a company over a period of time.

Before we move to the differences, let’s understand what are Statement of Affair and Balance Sheet:

  • Statement of Affair: A statement of affairs is a document that lists all of a company’s assets (things it owns) and liabilities (money it owes). It shows the financial position of the company at a specific point in time.
  • Balance Sheet: A balance sheet is a financial statement that shows a company’s assets, liabilities, and equity at a specific point in time. It helps to understand the financial health of a company by showing if it has more assets than liabilities, or if it owes more money than it has.

Statement of Affair vs Balance Sheet

Now, let’s move to Statement of Affair vs Balance Sheet:

Major differences between Statement of Affair and Balance Sheet

Statement of Affair Balance Sheet
A statement of affairs shows the financial position of a company at a specific point in time. A balance sheet shows the same information over a period of time.
A statement of affairs is usually used when a company is in financial trouble. A balance sheet is a regular financial document used by all companies.
A statement of affairs is a snapshot of a company’s financial situation. A balance sheet is a longer-term view.
A statement of affairs may include estimates of the value of assets and liabilities. A balance sheet must use exact values.
A statement of affairs is usually prepared by the company’s management. A balance sheet is audited by an independent party to ensure accuracy.

That’s it.

Note that sometimes, the question might also be asked as “distinguish between Statement of Affair and Balance Sheet”.

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Final words

A statement of affairs and a balance sheet are both important financial documents that help to understand the financial health of a company. However, they show this information in different ways and serve different purposes.

A statement of affairs is a snapshot of a company’s financial situation at a specific point in time, while a balance sheet shows the same information over a period of time.

Understanding the difference between these two documents can help you make informed financial decisions.

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