Personal Financial Statements

The Income Statement reports the profit or loss for a company or person.  It also shows where the income came from.   For a business, the main components that make up an Income Statement are Net Sales, Cost of Goods Sold, Gross Profit, Operating Expenses, Other Non-Operating Revenues & Expenses.

A balance sheet is a financial statement that reports how much an individual or company owns, owes and the difference between these two. A person’s balance sheet can show their net worth which is calculated by adding up all of their assets and then subtracting any debts they owe.

A cash flow statement, also known as a profit and loss statement or P&L, is one of the most important financial documents for any company. It shows how much money came in (revenue) versus how much was spent (expenses). The difference between these two numbers is your net income or operating profit.  Understanding what a cash flow statement is will help you ensure that you are maximizing profits while minimizing costs.