The reporting entity of personal financial statements is an individual or a group of related individuals. Individuals prepare or have accountants prepare personal financial statements for obtaining bank loans, income tax planning, retirement planning, gift and estate planning, and the public disclosure of financial affairs.

For each reporting entity, a statement of financial position is required. The statement presents assets at estimated current values, liabilities at the lesser of the discounted amount of cash to be paid or the current cash settlement amount, and net worth. A provision should also be made for estimated income taxes on the differences between the estimated current value of assets. Comparative statements for one or more periods should be presented. A statement of changes in net worth is optional.

Personal financial statements should be presented on the accrual basis. A classified balance sheet is not used. Assets and liabilities are presented in the order in which they can be converted into cash (i.e., liquidity) and maturity, respectively. A business interest that constitutes a large part of an individual's total assets should be shown separate from other assets. Such an interest would be presented as a net amount. A statement of changes in net worth would disclose the major sources of increases and decrease in net worth. Increases in personal net worth arise from income, increases in estimated current value of assets, decreases in estimated current amount of liabilities, and decreases in the provision for estimated income taxes. Decreases in personal net worth arise from expenses, decreases in estimated current value of assets, increases in estimated current amount of liabilities, and increases in the provision for income taxes.

Good information for the financial statement.

Lenders, and most equity investors, want to know not only about your business's financial position, but also about the personal financial profile of the business's owners. The attached file is a personal financial statement form used by a Midwest regional bank. It outlines all the information that conventional lenders will want to know about your personal finances, from a description of your assets and liabilities to identification of your sources of income. You can get a good idea of what lenders are looking for, how your financial profile will appear to them, and the importance of carefully completing such a form before submitting it to a lender.

File description: The file contains a three-page document in rich text format (RTF) that is suitable for use with most word processing programs used in the Windows environment.

Special Features:

* concise organization of itemized relevant personal financial factors
* practical outline for preparing a specific lender's personal financial statement form
* detailed schedules for your outstanding credit sources and your specific assets, including securities, real estate and life insurance
* standard consent provisions regarding the use of the personal information for additional credit inquiries
* standard provisions imposing an ongoing duty on the applicant to update information.