101-3 Financial Statements

Question 1

Statement of financial position

Answer 1

Aka personal balance sheet
Aka net worth statement

Provides a snapshot of a clients net worth on a given date

Question 2

Net worth equation

Answer 2

Assets - liabilities = net worth

Question 3

Statement of cash flows

Answer 3

Aka cash flow statement

Reflects the client’s financial activity over a period of time

Summarizes the items of income (including salary, wages, or both) that were actually received (cash inflows) and the expenditures actually made (cash outflows) during a specific period

3 components:

• cash inflows
• cash outflows
• net cash flow (surplus or deficit)