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Continuing our series on financial statements, the image below explains liabilities.
A liability is defined as an obligation of an entity arising from past transactions or events, the settlement of which may result in the transfer or use of assets, provision of services or other yielding of economic benefits in the future. Liabilities . . . → Read More: Basics of a Financial Statement – Part 6 – Liabilities The Call: ¹
A call option, often simply labeled a “call”, is a financial contract between two parties, the buyer and the seller of this type of option. The buyer of the call option has the right, but not the obligation to buy an agreed quantity of a particular commodity or financial . . . → Read More: Investing in Options – The Call and Put The Income Statement is comprised of Income and Expenses. The Financial Statement is comprised of both the Cash Flow and the Net Worth Portions. Let’s look at the Asset Portion. . . . → Read More: Basics of a Financial Statement – Part 5 – Cash Flow and Net Worth In the previous parts we introduced the financial statement, explained the path the money takes, and introduced the income statement. This diagram explains the other side of the income statement: expenses. All your expenses need to serve a purpose. They can increase your assets, provide you with sustenance or protection, or provide for your future. If your expenses are not serving a purpose then they are harming your financial health. . . . → Read More: The Basics of Financial Statements – Part 4 – Expenses The main difference between buying solar panels and getting your power from a utility is the way your payment is structured. Solar panels have a large upfront cost, like buying a house. Utility power is pay as you, like renting a home. There’s a point where your monthly payments to the utility will become more costly then the upfront cost of a alternative power source. This point is called the pay-back point. After you reach this point you can consider all the money you were going to pay the utility company a return on your investment. . . . → Read More: The Economics of Solar Here is part three of the Basics of Financial Statements. The graphic below illustrates the income statement part of a financial statement. . . . → Read More: Basics of Financial Statements – Part 3 – The Income Statement The financial statement has two parts: The income statement, which lists the income and expenses, and the balance sheet which lists the assets and liabilities. These will give you the big picture of how you are doing financially by showing you if your liabilities outweigh your assets or your expenses outpace your income. . . . → Read More: The Basics of a Financial Statement – Part 2 Below is a flowchart introducing the basics of a financial statement. A financial statement is a useful tool to see where your money stands and where it will be in the future. Making a financial statement is absolutely necessary if you want to increase your wealth. This is part 1 of the basics of financial statements. . . . → Read More: The Basics of a Financial Statement – A Visual Guide Passive income is earning while not being present. Such as dividends and income paid on a principal, starting or buying a business, operating an income producing property, writing a book, making or recording a song. You can also become an associate in a network marketing team. . . . → Read More: Definition of Wealth You can’t just sit on your assets and become wealthy. Your assets must work for you now. You have probably heard that the difference between the rich and everyone else is that everyone else works for their money and the rich have their money working for them. Nothing could be truer. . . . → Read More: Built up Your Capital? Now What? |
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