Understanding Financial Statements

​Understanding a Financial statement

By Latecia Love

Learning Objectives

​Students will be able to:

!. Identify the three main types of financial statements
2. Define key financial terms such as revenue, expenses, profit, assets, liabilities, and equity.
3.Explain what information each financial statement shows about a business or organization.
4. Interpret basic data from a simple financial statement to make conclusions about financial health.

Bell ringer (5-7 minutes)

​Prompt on board

"Imagine uou earn $500 this month. You spend $300 on food, clothes, and entertainment, and save $200.

1. Is your financial situation healthy?
2. How could someone else quickly understand this without talking to you?

Lesson Overview

Connect statements to real-life examples (personal budget, schaol club, small business).

Income statement-shows profit or loss over time
Balance sheet-shows what is owned vs, owed at a specific moment
Cash flow statement- shows how cash moves in and out

​Briefly explain:

• Provide a simple sample income statement

• Ask students:

• What was the total revenue?

• What were the total expenses?

• Did the business make a profit or loss?

​Guided Practice

Exit Ticket (5 minutes)

​Directions: Answer the following questions

1. . Name one type of financial statement and explain what it shows.

2. If a company has more expenses than revenue, what is the result called?

3. Why might a business owner or manager use financial statements?