¬© John A. Tyler
KNOW WHAT YOU OWN and WHAT YOU OWE
This seems like a simple statement. You can make a list of your possessions, and your liabilities.
If you prepare a personal balance sheet you will categorize in money terms What You Own, What You Owe, and What You Have Left, which is your net worth.
Accounting systems, if you have entered all your money transactions, can tell you how much you own and owe at any point in time. This report is called a Balance Sheet.
In recent years many have discovered that the value of their assets, including homes, were not as high as thought, and that the mortgages on these homes could not be paid on time. Which meant that their net worth may have been negative, that is they owed more than they owned.
Besides needing a snapshot of OWNED, OWED, AND WHAT’S LEFT, accounting systems produce Statements of Profit and Loss, which can also be called HOW I DID over a selected time period.