The Main Purposes of Personal Financial Statements Are To

question 66

Multiple Choice

The main purposes of personal financial statements are to:

• A)summarize the value of the items that you own and the amountsthat you owe
• B)track your cash inflowsby source and your outflows by type
• C)identify strengths and weaknesses in your current financial situation and provide data for use in filing your income tax return or applying for credit
• D)measure progress toward your financial goals
• E)all of the above

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Definitions:

U.S. Dollar

The official currency of the United States of America, widely used as a benchmark and reserve currency globally.

Income Statement

A financial statement that shows a company’s revenue and expenses over a specific period, leading to the net income or loss for that period.

Functional Currency

Functional currency is the main currency used by a business or economic entity in its primary economic environment for accounting purposes.

Straight-Line Method

A method of accounting for depreciation by equally spreading the cost of an asset over its useful life.