Final answer:
The main purposes of personal financial statements are to report financial position, measure progress toward goals, track financial activities, and aid in preparing tax forms or credit applications. They are an essential part of managing personal finances and making informed financial decisions.
Step-by-step explanation:
The main purposes of personal financial statements are to: a. Report your current financial position, b. Measure your progress toward financial goals, c. Maintain information about your financial activities, d. Provide data for preparing tax forms or applying for credit, and e. All of the above. These statements serve a critical role in personal financial planning and management.
Monitoring income and expenses through a budget is key to maintaining financial health, and budgeting is a practical tool for making financial decisions. Personal financial statements can also assist in evaluating the costs and benefits of declaring personal bankruptcy, buying insurance, and making charitable contributions.