The Balance Sheet and the Income Statement in Cashfulness: the photo and the film
In short
The Balance Sheet is a photograph: what you own, what you owe and what's left for you, today. The Income Statement is a film: how much came in and how much went out over a period, with the profit or loss at the bottom. In Cashfulness you'll find both in the Balance section, and they read the same entries: that's why they talk to each other.
This page goes with lesson 7 of the free video course "Cashfulness step by step". The steps are in the same order as the video.
Watch the lesson
The lesson lasts about six minutes.
Where to find them
- On a computer: sidebar, Balance section, Balance sheet and Income statement. The same section also has Reports.
- On a phone: from the side menu, from the cards on the home page, or at the bottom of the Reports page. Opened from the home page cards, the report has no export controls.
The Balance Sheet, the photo
At the top, one sentence sums it all up: "Balance sheet as of" today's date, and your net worth. Below are three sections: Assets, Liabilities, Net Equity. The Balance Sheet is always as of today.
There's a rule here that never breaks: total assets equal liabilities plus net equity. Nobody adjusts it by hand: every entry you record has two sides.
Drilling down. Each section opens and closes with a click, all the way down to a single account. With the Depth: level selector you choose how many levels to see at once. If you need only a few numbers, stay at the top.
Assets+ and Assets-
Inside the assets you'll find two lines: Assets+ and Assets-. There's only one difference: an asset belongs in the plus if it pays you, meaning it brings in money or grows in value; it belongs in the minus if you own it but it doesn't pay you. Whether you use it doesn't matter.
- Assets+: investments, a property you rent out, shares in a fund.
- Assets-: a checking account that pays no interest, the car, the home you live in.
The home you live in is yours, and it's right to count it among your assets: if you sell it one day, you get its value. But it doesn't give you an income, and it costs you every month. That's why it's in the minus. An account sits in one or the other depending on where you place it in your chart of accounts.
On the home page this distinction turns into a number: Financial independence, the first of the four indicators at the top. It's the Assets+ line divided by total assets.
The Income Statement, the film
The Income Statement puts Revenues on one side and Costs on the other, line by line, and at the bottom the result: Profit or Loss. It starts from the beginning of the year, but you choose the period:
- Click the period selector: Select period opens.
- Choose from Current month, Current quarter, Current year, Previous year, Year to date (YTD), Last 12 months or Custom.
The profit for the period is what made your net equity grow. They're not two counts hoping to match: they're two ways of reading the same entries.
Comparing with last year
Turn on the Compare switch: Comparison view active appears, and next to the Current period there's Compare with, which starts from the same period a year earlier and can be changed. To go back, Deactivate. If you've only just started, the comparison column is empty: it becomes valuable from the second year. The right question isn't how much did I spend, but how much did I spend compared with before.
The other reports
The Reports page, in the same section, gathers them all. At the top is Cruising range: how many months, or years, you could keep going without new income while keeping your current way of life. Below, under Your reports: Costs, Net worth over time, Income and expenses, Projected balance. To see how your net worth changes month by month, open Net worth over time.
Taking them out of the app
With the Ultra plan, the Balance Sheet and the Income Statement can be exported and printed: the Export PDF icon and the More options menu, Export section, with Print…. From the Balance Sheet only, there's also Export PDF (CEE classic balance): the two-column statement that speaks your accountant's language. At the bottom it states that the balance has been verified: total assets equal total liabilities and equity.
Common mistakes
- Looking for a date on the Balance Sheet. It's always as of today; the history is in Net worth over time.
- Putting the home you live in among Assets+ because it's worth a lot. Value doesn't matter: what matters is whether it pays you.
- Comparing months with years. Before reading the Income Statement, check which period is selected.
- Looking for the PDF from the home page card. Open the report from the sidebar or from the Reports page.
Frequently asked questions
Can I see the Balance Sheet at a past date?
No: in Cashfulness the Balance Sheet is always as of today. To see how it has changed over time there's the Net worth over time report, on the Reports page.
Why is the home I live in among Assets-?
Because the distinction is between what pays you and what doesn't. The home you live in is yours and it's worth something, but it gives you no income and costs you every month. A home you rent out, which brings in rent, would be among Assets+.
Is the profit in the Income Statement always equal to the growth in net equity?
Almost always, because the two reports read the same entries. The differences come from things that touch your equity without going through revenues and costs, such as exchange-rate movements and the opening balance of a new account.
In the manual
The Balance sheet and Income statement chapter of the user manual has sections on the Income statement and on the other reports. If you'd like to understand why the books always balance, there's the Double-entry bookkeeping, step by step course.
The previous lesson
Lesson 6 · Budgets and categories in Cashfulness. A budget on a category made on the spot, the two bars and renewing when it expires.
The next lesson
Lesson 8 · Importing into Cashfulness from CSV and GnuCash. These reports are only as accurate as the entries you put into them. If your transactions are already in your bank statement or in GnuCash, you don't have to type them in again.
Vittorio Giusti is an economist and psychologist, and he built Cashfulness.