CFP
Financial Statements - Personal Financial Statements
Personal financial statements are essential to the financial planning process. Without these statements, it is difficult to help an individual to achieve his or her financial goals and objectives.
A. Statement of financial position
Also known as a balance sheet, a statement of financial position shows a person's assets, liabilities and net worth as of a given date. Think of it as a snapshot of an individual's financial condition at a given moment in time.
Assets appear first on the statement of financial position with the assets listed in order of liquidity, beginning with cash accounts. Listed next would be other assets that could be liquidated quickly, if necessary, such as mutual fund or stock shares. Assets that would take time to liquidate, such as real estate or ownership of a closely held business, would appear near the end.
Listed alongside each asset is the estimated value of that asset. The value of each asset is added to come up with a total assets figure.
Liabilities appear second on the statement of financial position with the individual liabilities appearing in the order they come due. Current liabilities, those that are due within one year, would be listed before noncurrent liabilities, which are those that are not due for more than one year.
As with assets, listed along each liability is the estimated value of that liability. The value of each liability is added up to come up a total liabilities figure.
Total liabilities are subtracted from total assets to determine an individual's net worth. If liabilities exceed assets, an individual would have a negative net worth.
JAMES L. and SUSAN M. DAVIES
STATEMENT OF FINANCIAL POSITION
Year ending Dec. 31, 2006
1 JTWROS
2 Originally purchased 5 years ago for $249,500
3 Fixed rate loan, 6.5%, 25 years remaining
A. Statement of financial position
Also known as a balance sheet, a statement of financial position shows a person's assets, liabilities and net worth as of a given date. Think of it as a snapshot of an individual's financial condition at a given moment in time.
Assets appear first on the statement of financial position with the assets listed in order of liquidity, beginning with cash accounts. Listed next would be other assets that could be liquidated quickly, if necessary, such as mutual fund or stock shares. Assets that would take time to liquidate, such as real estate or ownership of a closely held business, would appear near the end.
Listed alongside each asset is the estimated value of that asset. The value of each asset is added to come up with a total assets figure.
Liabilities appear second on the statement of financial position with the individual liabilities appearing in the order they come due. Current liabilities, those that are due within one year, would be listed before noncurrent liabilities, which are those that are not due for more than one year.
As with assets, listed along each liability is the estimated value of that liability. The value of each liability is added up to come up a total liabilities figure.
Total liabilities are subtracted from total assets to determine an individual's net worth. If liabilities exceed assets, an individual would have a negative net worth.
JAMES L. and SUSAN M. DAVIES
STATEMENT OF FINANCIAL POSITION
Year ending Dec. 31, 2006
| ASSETS | LIABILITIES | ||
| Cash accounts | Short-term debt | ||
| Checking account | $2,400 |
Credit cards | $2,450 |
| Money market | 16,345 | Home equity LOC | 6,320 |
| Total | $18,745 | Total | $8,770 |
| Investment accounts | Long-term debt | ||
| S&P 500 Index fund1 | $23,976 | Auto loan | $13,000 |
| Roth IRA - James | 18,765 | Mortgage3 | 230,000 |
| Roth IRA - Susan | 16,543 | ||
401(k) - James |
98,654 | Total | $243,000 |
| Total | $157,938 | TOTAL LIABILITIES | $251,770 |
| Use assets | |||
| Autos | 18,976 | ||
| Personal property | 35,000 | NET WORTH | $282,889 |
| Residence2 | 304,000 | ||
| Total | $357,976 | ||
| TOTAL LIABILITIES | |||
| TOTAL ASSETS | $534,659 | AND NET WORTH | $534,659 |
1 JTWROS
2 Originally purchased 5 years ago for $249,500
3 Fixed rate loan, 6.5%, 25 years remaining
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