Q.Statement of affairs is generally prepared to find out the ________ of the business.

A Statement of Affairs is prepared under incomplete records to ascertain the Capital of the business (the balancing figure), so option (c) is correct.

A business that keeps incomplete records (single entry) has no proper ledger, so it cannot draw up a Trial Balance or a normal Balance Sheet. To estimate profit, it prepares a Statement of Affairs — a rough balance-sheet-like statement listing all known assets on one side and all liabilities on the other.

The difference between total assets and total liabilities is the balancing figure, which is the capital on that date. By finding capital at the beginning and at the end of the year (and adjusting for drawings and fresh capital), profit or loss is then computed by comparison.

…