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Accountants' Handbook, Volume Two, Special Industries and Special Topics, 12th Edition by Lynford Graham, D. R. Carmichael

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Chapter 22

Personal Financial Statements

George I. Victor, CPA

Giambalvo, Stalzer & Company, CPAs, P.C.

22.1 What Are They? And Why Do We Need Them?

(a) What Is a Personal Financial Statement?

(b) Whose Financial Statement Is It?

(c) Why Are They Needed?

(d) Cash, Accrual, or Something Else?

(e) Which Asset/Liability Goes First?

22.2 Practical Tips

(a) Due Diligence in the Accountant–Client Relationship

(b) Understanding of the Engagement to All Parties

(c) Value of Written Representations

(d) Operating Rules Are Otherwise Known as Applicable Professional Standards

22.3 Rules and Guidance in Presenting Asset Values

(a) Start by Using the Estimated Current Value

(b) What Is Owed from Others?

(c) Stock Market and Other Markets

(d) Limited Partnership Interests Are Limited

(e) Gold, Silver, and Other Precious Metals

(f) Options on Assets Other Than Marketable Securities

(g) Life Insurance

(h) A Real Challenge Is Valuing a Closely Held Business

(i) Real Estate

(i) Location, Location, Location

(j) Personal Property

(k) Intangible Assets

(l) Future Interests

22.4 Rules and Guidance in Presenting Liabilities

(a) Start by Using the Estimated Current Amount of the Debt or Liability

(b) Fixed Commitments

(c) Contingencies, Risks, and Uncertainties

(d) Paying the Devil His Due: Income Taxes

22.5 Provision for Income Taxes

(a) Definition

(b) Computing the Provision for Income Taxes

(c) Tax Basis

(d) Disclaimer

(e) Omission of Disclosure

22.6 Statement of Changes in Net Worth

(a) Definition ...

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