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Statement of Affairs

It is commonly stated that when the net worth or net assets (Capital) at the end of the given period is more than that of the beginning (with necessary adjustments), the result is profit, and when it is the opposite, there is a loss. It is, therefore, necessary to find out capital in the beginning and at the end, a statement showing different assets and outside liabilities has to be prepared. This statement is called Statement Affairs which is similar to Balance Sheet. The accountant utilizes the following sources for the purpose of finding out the assets and outside liabilities of a business enterprise:

(i)    Cash Book for cash balance.

(ii)    Bank Pass Book for bank balance.

(iii)    Personal Ledger for Debtors and Creditors.

(iv)    Stock by actual counting and valuation.

(v)    As regards Fixed Assets, he prepares a list of them. The proprietor would help the accountant by disclosing the original cost and date of purchase, all a matter of mere memory. After deducting reasonable amount of depreciation, the written down or depreciated value would be included in the Statement of Affairs.

(vi)    Outstanding and prepaid expenses and income would be ascertained from rough noting here and there or mere memory.


The assets and liabilities are suitably arranged in the Statement of Affairs and the excess of assets over liabilities is the capital (the balancing figure.)

Statement of Affairs

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