Statement of Affairs

Written by True Tamplin, BSc, CEPF®

Reviewed by Subject Matter Experts

Updated on March 28, 2023

Statement of Affairs: Definition

Similar to a balance sheet, a statement of affairs is a statement of assets and liabilities that is prepared to find out capital under the single entry system.

When calculating profit or loss using this method, it is worth considering both fresh capital (or additional capital) and drawings.

Fresh Capital or Additional Capital

If fresh or additional capital is introduced during the period, it will make the closing capital incorrect. To calculate the true amount of profit or loss, deduct the fresh capital from the closing capital.


If an owner withdraws an amount for personal use during the period, the drawing will reduce the amount of closing capital. Therefore, it is necessary to add the amount drawn to the closing capital to reflect the true profit, as shown here:

Net Profit = Closing Capital + Drawings - Opening Capital - Fresh Capital

Differences Between Statement of Affairs and Balance Sheet

Statement of Affairs Balance Sheet
Prepared under the single-entry system Prepared under the double-entry system
Prepared from various sources (e.g., information from other sources, money, etc.) Prepared only from books of accounts
Accuracy is unreliable due to preparation from incomplete records Accuracy is reliable and can be verified because it is prepared from a set of books maintained under the double-entry system.


John & Co. keeps their books using the single-entry system. The position of the firm on 1 January 2019 was as follows:

  • Stock in trade = $18,000
  • Debtors = $15,000
  • Furniture and fixtures = $17,500
  • Cash at bank = $12,500
  • Sundry creditors = $13,500
  • Outstanding salaries = $2,200

The position of the firm on 31 December 2019 was as follows:

  • Stock in trade = $24,000
  • Debtors = $19,500
  • Furniture and fixtures = $15,000
  • Plant = $10,000
  • Sundry creditors = $12,000
  • Bank overdraft = $8,000

During the year, one of the owners withdrew $3,500 for personal expenses. In this case, charge interest on capital @ 5% p.a.

Required: Prepare Statement showing the company's profit or loss for the year ended 31 December 2019.


Statement of Affairs for 1 January
Statement of Affairs for 31 December
Statement of Profit and Loss

Statement of Affairs FAQs

About the Author

True Tamplin, BSc, CEPF®

True Tamplin is a published author, public speaker, CEO of UpDigital, and founder of Finance Strategists.

True is a Certified Educator in Personal Finance (CEPF®), author of The Handy Financial Ratios Guide, a member of the Society for Advancing Business Editing and Writing, contributes to his financial education site, Finance Strategists, and has spoken to various financial communities such as the CFA Institute, as well as university students like his Alma mater, Biola University, where he received a bachelor of science in business and data analytics.

To learn more about True, visit his personal website, view his author profile on Amazon, or check out his speaker profile on the CFA Institute website.