Statement of financial position produced from incomplete accounting record is commonly known as

Question

Statement of financial position produced from incomplete accounting record is commonly known as

1. A. Balance sheet
2. B. Statement of affairs (Correct answer)
3. C. Statement of financial operations
4. D. Cash flow statement

Correct Answer

Option B — Statement of affairs

Detailed Solution & Explanation

The correct answer is Statement of affairs.

Key Points

• When accounts are prepared from incomplete records (single-entry or partial records), the statement showing assets, liabilities and net worth is called a "Statement of Affairs" — not a formal Balance Sheet.

Additional Information

• Under single entry, no ledger is maintained for all accounts, so a balance sheet cannot be drawn directly — the Statement of Affairs is prepared instead, listing assets and liabilities to derive capital.
• Profit is then found by the capital comparison method: closing capital + drawings − additional capital − opening capital.
• The difference from a balance sheet matters: a Statement of Affairs rests on estimates and physical verification, not on tested ledger balances, so it is less reliable.
• Single entry is described as incomplete, not a system in its own right, because it records only personal and cash accounts.