Financial Statements Explained

By the end of this course, students should be able to:

· Define bookkeeping, accounting, and finance, and distinguish between their function in a business.

· Define financial accounting and management accounting.

· Read and interpret the three main financial statements: income statement, balance sheet, and cash flow statement.

· Learn the importance and use of each financial statement.

· Define and understand different accounts in each financial statement.

· Distinguish between revenue and expense.

· Calculate gross profit, operating profit, and net profit.

· Learn the structure and layout of an income statement.

· Learn how to prepare a simple income statement for a small business.

· Define assets, liabilities, and equity.

· Differentiate between current and non-current assets.

· Differentiate between current and non-current liabilities.

· Understand equity and retained earnings.

· Learn the structure and layout of a balance sheet.

· Learn how to prepare a simple balance sheet for a small business.

· Appreciate the importance of cash and the need for preparing a cash flow statement.

· Distinguish between cash inflow and cash outflow for a business.

· Understand the three main sections in a cash flow statement: operating, investing, and financing activities.

· Learn the structure and layout of a cash flow statement.

· Learn how to prepare a simple cash flow statement for a small business.