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distinguish between statement of affairs and balan...

Question:
Distinguish between statement of affairs and balance sheet.

Answer:

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.

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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Popular questions of class 11 Accountancy

Mr. Sunrise started a business for buying and selling of stationery with ₹ 5,00,000 as an initial investment. Of which he paid ₹ 1,00,000 for furniture, ₹ 2,00,000 for buying stationery items. He employed a sales person and clerk. At the end of the month he paid ₹ 5,000 as their salaries. Out of the stationery bought he sold some stationery for ₹ 1,50,000 for cash and some other stationery for ₹ 1,00,000 on credit basis to Mr. Ravi. Subsequently, he bought stationery items of ₹ 1,50,000 from Mr. Peace. In the first week of next month there was a fire accident and he lost ₹ 30,000 worth of stationery. A part of the machinery, which cost ₹ 40,000, was sold for ₹ 45,000.

From the above, answer the following :
1. What is the amount of capital with which Mr. Sunrise started business?
2. What are the fixed assets he bought?
3. What is the value of the goods purchased?
4. Who is the creditor and state the amount payable to him?
5. What are the expenses?
6. What is the gain he earned?
7. What is the loss he incurred?
8. Who is the debtor? What is the amount receivable from him?
9. What is the total amount of expenses and losses incurred?
10. Determine if the following are assets, liabilities, revenues, expenses or none of the these: sales, debtors, creditors, salary to manager, discount to debtors, drawings by the owner.

Q: Explain the qualitative characteristics of accounting information.

Q: Describe the role of accounting in the modern world.

Q: What do you mean by an asset and what are different types of assets?

Differentiate between source documents and vouchers.

Complete the following sentences with appropriate words:
(a) Information in financial reports is based on .....................
(b) Internal users are the ..................... of the business entity.
(c) A ..................... would most likely use an entities financial report to determine whether or not the business entity is eligible for a loan.
(d) The Internet has assisted in decreasing the ..................... in issuing financial reports to users.
(e) ..................... users are groups outside the business entity, who uses the information to make decisions about the business entity.
(f) Information is said to be relevent if it is ......................
(g) The process of accounting starts with ............ and ends with ............
(h) Accounting measures the business transactions in terms of ............ units.
(i) Identified and measured economic events should be recording in ............ order.

What is a journal? Give a specimen of journal showing at least five entries.

Define accounting and state its objectives.

Enumerate informational needs of management.

Complete the following work sheet:
(i) If a firm believes that some of its debtors may ′default′, it should act on this by making sure that all possible losses are recorded in the books. This is an example of the ___________ concept.
(ii) The fact that a business is separate and distinguishable from its owner is best exemplified by the ___________ concept.
(iii) Everything a firm owns, it also owns out to somebody. This co-incidence is explained by the ___________ concept.
(iv) The ___________ concept states that if straight line method of depreciation is used in one year, then it should also be used in the next year.
(v) A firm may hold stock which is heavily in demand. Consequently, the market value of this stock may be increased. Normal accounting procedure is to ignore this because of the ___________.
(vi) If a firm receives an order for goods, it would not be included in the sales figure owing to the ___________.
(vii) The management of a firm is remarkably incompetent, but the firms accountants can not take this into account while preparing book of accounts because of ________ concept.

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Explain the concept of depreciation. What is the need for charging depreciation and what are the causes of depreciation?

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If wages paid for installation of new machinery is debited to wages Account, it is:

(a) An error of commission.
(b) An error of principle.
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(d) An error of omission.

Which of following errors will be rectified through suspense account:

(a) Sales return book undercast by Rs. 1,000.
(b) Sales return by Madhu Rs. 1,000 not recorded.
(c) Sales return by Madhu Rs. 1,000 recorded as Rs. 100.
(d) Sales return by Madhu Rs. 1,000 recorded through purchases returns book.

Which of the following is not an error of principle:

(a) Purchase of furniture debited to purchases account.
(b) Repairs on the overhauling of second hand machinery purchased debited to repairs account.
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Which of the following is not an error of commission:

(a) Overcasting of sales book.
(b) Credit sales to Ramesh 5,000 credited to his account.
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If suspense account does not balance off even after rectification of errors it implies that:

(a) There are some one sided errors only in the books yet to be located.
(b) There are no more errors yet to be located.
(c) There are some two sided errors only yet to be located.
(d) There may be both one sided errors and two sided errors yet to be located.

If the trial balance agrees, it implies that:

(a) There is no error in the books.
(b) There may be two sided errors in the book.
(c) There may be one sided error in the books.
(d) There may be both two sided and one sided errors in the books.

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A Trial balance is prepared:

(a) After preparation financial statement.
(b) After recording transactions in subsidiary books.
(c) After posting to ledger is complete.
(d) After posting to ledger is complete and accounts have been balanced.

Question:
Distinguish between statement of affairs and balance sheet.

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Question:
Distinguish between statement of affairs and balance sheet.