Personal Financial Statements

Question 1

What are and aren’t appropriate financial statements for personal financial statements?

Answer 1

Are: Statement of Financial Condition & Statement of Changes in Net Worth
Aren’t: Income Statement & Statement of Cash Flows

Question 2

How is personal Statement of Financial Condition reported? How are income taxes calculated here?

Answer 2

• On accrual basis using fair value

- As if assets had been realized and liabilities had been liquidated

Question 3

How should significant interests in separate business be shown? Non-separate businesses?

Answer 3

• As a single line item and amount for each business interest
• As separate assets and liabilities that comprise business activity

Question 4

Do we include income as an increase in Statement of Net Worth?

Answer 4

-No unless it results in an increase in assets