Personal Financial Statement (PFS)
Personal Financial Statement or what we call the PFS is a statement which shows the financial status of an individual. In other words, a PFS acts as a mirror which reflects the financial standing of a person.
A PFS is just like a Balance Sheet, but not of a business, it's the balance sheet of a person, an individual.
It is a statement of your personal assets and liabilities that you owe. In a PFS, one has to also report his annual income. You have to disclose your annual salaries and wages, business income and income from real estate, etc.
Thus we can say, there's a slight difference between balance sheet of a business and balance sheet (PFS) of an individual. While preparing balance sheet for businesses, we do not include any income, whereas in the PFS, we also include the annual income of the individual.
In the very beginning of a PFS, one can find personal details of an individual like his name, SSN, contact, address, email and name of his business, etc.
Then comes the assets and liabilities of an individual. These are bifurcated into various schedules. Each schedule contains a head under which you can either note down the value of your asset or liability. Some of the examples are Cash and Cash at Bank, Stocks and Bonds, Real Estate owned, Automobiles, Mortgages, Line of Credit, Credit Card, etc.
The total liabilities of an individual are reduced from the assets owned by him to pull out the Net Worth of an individual. Basically, it is the difference between what you own and what you owe.
A PFS is very helpful at the time of application of a mortgage. When you approach a lender or a mortgage broker, the very first thing they will ask you for is the PFS. This is because they want to check your financial compatibility. One should make sure you have a up-to-date PFS whenever you approach lender for a loan or mortgage.
Want to know more about PFS or any other accounting and tax preparation services. Connect with our team call us on (+1) 718-426-4661 and email us on baggarwal@aggarwalcpa.com
