Personal Balance Sheet Example

Cash in Balance Sheet

Personal balance sheet example
Figure 1

In this case, Cash and Earnings accounts are calculated as follows:

  • Cash = revenue – expenses = 15,000$ – 5,000$ = 10,000$
  • Earnings = revenue – expenses = 15,000$ – 5,000$ = 10,000$

Liabilities in Personal Balance Sheet

Loan in personal balance sheet
Figure 2

Now, Cash and Earnings accounts are calculated as follows:

  • Cash = revenue – expenses + loan = 15,000$ – 5,000$ + 14,000$ = 24,000$
  • Earnings = revenue – expenses = 15,000$ – 5,000$ = 10,000$

Assets in Personal Balance Sheet

When it’s enough cash in our balance, we can make capital expenditure and buy an asset. We will consider a car as an example. Figure 3 shows the state of the personal balance sheet when the deal is made, the seller received the money, and we own the car.

Assets in personal balance sheet
Figure 3

Take a look at Cash and Earnings accounts calculations:

  • Cash = Earnings + loan – car = 10,000$ + 14,000$ – 22,000 = 2,000$
  • Earnings = revenue – expenses = 15,000$ – 5,000$ = 10,000$

As you see, there is a straight logic in Cash equation: earned money, got a loan, and bought a car.

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