What is personal income statement?
A personal income statement is a statement of activity that shows the revenues and the expenses for a stipulated period of time, usually one year.
What are your revenues?
Revenues are either immediate positive cash flows (increase in cash from cash transactions) or expected positive cash flows (usually from credit transactions) from your activities or transactions.
What are expenses?
Expenses bring about either an immediate cash flow (a decrease in cash) or an expected cash flow from your cash asset. Expenses are the costs of the goods and the services you buy either on cash basis or on credit basis.
Revenues produce positive cash flows (an increase in cash). The positive cash flows could be from the present, past and future activities. Expenses produce negative cash flows (a decrease) from present, past and future transactions.
Income is the difference between revenues and expenses for a stipulated period of time.
Your personal income statement also known as personal earnings statement is a financial statement that should under normal circumstances, show your profitability for a stipulated period of time.
How to prepare personal income statement?
Personal income statement is prepared by deducting total expenses from total revenues.
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