The statement of affairs-bankruptcy accounts, Financial Accounting

The Statement of Affairs

The statement of affairs sets out:

(a) The various assets of the debtor, at the values they are expected to realise;
(b) The creditors, classified according to their "priority".

The balancing figure on the statement of affairs is the estimated deficiency  as at the date at which it was prepared.

For a sole trader, one statement of affairs will be prepared to include all assets and liabilities, whether private or business.

For a partnership, a statement of affairs is prepared in respect of the partnership assets and liabilities-called the joint estate. A separate statement is also prepared for each partner, showing his personal assets and liabilities.  Any surplus on a separate estate becomes an asset of the joint estate and vice versa.

The pro-forma statement of affairs sets out the order in which assets are shown. The order in which liabilities are discharged is:

  1. Secured creditors, out of the proceeds of their security;
  2. Costs and expenses of the bankruptcy; (these are not included in the Statement of Affairs because they have not been incurred at the date at which it is prepared);
  3. Pre-preferential creditors;
  4. Preferential creditors;
  5. Unsecured creditors;
  6. Deferred creditors;
  7. Any balance to the debtor.
Posted Date: 12/13/2012 2:59:05 AM | Location : United States







Related Discussions:- The statement of affairs-bankruptcy accounts, Assignment Help, Ask Question on The statement of affairs-bankruptcy accounts, Get Answer, Expert's Help, The statement of affairs-bankruptcy accounts Discussions

Write discussion on The statement of affairs-bankruptcy accounts
Your posts are moderated
Related Questions
ACCOUNTS REQUIRED This can be summarized depending on the nature of the situation. In a receivership you may be required to prepare a receivers receipt and payments. In the pro

Q. Define Strong form efficiency? In robustly efficient market finance directors will be alert to the fact that market prices are an accurate reflection of their company's fina

What two components are used to compute the return on assets ?

Considering the following information, what is the price of the share as per Gordon’s Model? Details of the Company Net sales Rs.120 lakhs Net profit margin 12.5% Outstanding prefe

Q. The capital investment appraisal techniques such as NPV, IRR, ARR, PV and Time value of money have become irrelevant post Celtic Tiger. Due to the depth of the recession comp

An investment project requires a net investment of $100,000 and is expected to generate annual net cash inflows of $25,000 for 6 years. The firm's cost of capital is 12 percent. De

Presentation method (formerly closing rate or net investment method) Under this method, the branch operates with a lot of degree of autonomy from the head office. This position i

Suppose the interest rate for a one-period bond is 4%. (a) What is the price of an asset paying (1,1,1) which means 1 after 1 period, 1 after 2 periods, and 1 after 3 periods.

1.From the following information you are required to prepare a cash Flow statement of XYZ Ltd for the year ended 31 st December 2009 LIABILITIES

Q. Illustrate Accounting ramifications? Accounting ramifications i) Restatement ii) Unable to file on timely basis while go back and determine what periods are effected