These two documents might sound similar, but they are very different. In bookkeeping, a statement of Affairs and a statement of position or Balance sheet are provided under unique circumstances at the end of the fiscal year.
|STATEMENT OF AFFAIRS||STATEMENT OF POSITION|
|A statement of position provides a clear picture of any business unit’s financial position and is more reliable.|
|It is suitable for all businesses|
A statement of affairs is a statement of assets and liabilities made at the beginning and end of an accounting period to determine the value of change in capital. It is comparable to a balance sheet in that the information supplied is partially obtained from tangible vouchers and papers rather than ledger accounts.
A statement of position, often known as a balance sheet, is a statement of assets and liabilities prepared after an accounting year to determine a business unit’s financial status. The balance sheet assists the company’s stakeholders in determining the company’s liquidity and solvency condition. A company’s balance sheet is created using the double-entry bookkeeping method based on comprehensive records, ledger balances, and final accounts.
Statement of Affairs vs. Statement of Position
Some transactions are entirely recorded on both the credit and debit sides, while others are just partially recorded. As a result, preparing a Trial Balance and Balance Sheet to determine the firm’s financial status is impossible. As a result, under such circumstances, the Statement of Affairs is prepared to decide the value of assets and liabilities after an accounting period.
A statement of position is more trustworthy than a statement of affairs since it is based on comprehensive records. It is typically written following the financial statement and contains an overview of all accounts. Any business entity can generate the Balance Sheet, whether a sole proprietorship, a partnership firm, a corporation or a non-profit organization.