Financial Statements Vocabulary
Income and Expense Statement
Income
Money that we receive for good and services during the reporting period
Expenses
Money that we spent during the period for goods and services
Gross Expenses
Income less Expenses
Taxes
Income taxes you pay, or that are taken out of our paycheck
Net Income/Loss
Difference between Income and Expense
Balance Sheet
Assets
Assets are the things we own or have and their dollar value. For example we could have money in checking or savings.We could own a house that has some value.
Liabilities
The things and total amount we owe on a loan against our assets.
For example, we have a mortgage on our house or a loan against our car. We can also owe money on a department store charge card or bank credit card.
Net Worth
Net worth is the difference between our assets and liabilities. If our net worth is negative we owe more than what we have. We are technically bankrupt.