FIN 502 Chapter Notes - Chapter 4: Cash Flow
Document Summary
Planning and personal finance is nothing more than managing family finances. No such thing a generally accepted accounting principles for personal financial statements. Deal with cash rather than accrual income. Balance sheet or statement of net worth: photograph of the family"s financial standing at a point in time. Summarizes major assets and liabilities, with balancing figure being the net worth. Balance sheet is essential for two reasons: provides benchmark or measure of process in meeting goals, listing and valuation of assets shows what you have to manage. Financial assets: provide income or are part of what you will consume in retirement. Valued at market value because we want to know how much we can consume by cashing them in; transactions costs liquidated about 2% of market value. Cash, deposits in financial institution, rsp, shares, bonds, real estate. Personal assets do not yield income, they provide consumption.
