Balance Sheet and Income Statements for Personal Financial Planning

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The correct answer is A. Personal financial statements.

Personal financial statements are a set of financial documents that are essential planning tools for developing and monitoring personal financial plans. These statements are typically comprised of a balance sheet and an income statement.

A balance sheet is a snapshot of an individual's financial position at a particular point in time. It lists the individual's assets, liabilities, and net worth. Assets can include cash, investments, real estate, and personal property, while liabilities can include loans, credit card balances, and other debts. Net worth is calculated by subtracting total liabilities from total assets.

An income statement, on the other hand, is a summary of an individual's income and expenses over a specific period of time, such as a month or a year. It lists all sources of income, such as salaries, wages, and investments, and subtracts all expenses, such as rent, utilities, food, and entertainment, to arrive at a net income figure.

By regularly updating and reviewing these financial statements, individuals can gain a better understanding of their financial position and make informed decisions about budgeting, saving, investing, and debt management. These statements are also useful in setting financial goals, such as saving for a down payment on a home or planning for retirement.

In contrast, legal financial statements are typically associated with businesses and may be required by law for tax or regulatory purposes. Illegal financial statements, as the name suggests, are financial documents that are created to conceal illegal activities, such as money laundering or tax evasion. A company profile, on the other hand, is a summary of a business's operations, products or services, and history, and is not directly related to personal financial planning.