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Business & economics · lesson 3 of 4

Financial statements

A report of revenue and expenses over a period.

University8 practice questionsNotes + worked examples
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Learn the ideas

Prerequisites: Basic arithmetic and percentages.

Income statement

A report of revenue and expenses over a period.

Balance sheet

A report of assets, liabilities and equity at a point in time.

Cash flow statement

A report grouping cash inflows and outflows by activity type.

Retained earnings

Accumulated earnings retained in the entity after distributions, subject to the accounting framework.

Worked examples

Example 1

Which term best matches this description: A report of revenue and expenses over a period.

Income statement is the matching concept in this lesson.

Income statement

Example 2

Which term best matches this description: A report of assets, liabilities and equity at a point in time.

Balance sheet is the matching concept in this lesson.

Balance sheet

Check your understanding

8 questions

Decimals or fractions are accepted for numeric answers. Proofs and written responses use sample answers and require human marking. This is practice, not a protected examination.

1 Which term best matches this description: A report of revenue and expenses over a period.

Show answer and explanation

Income statement

Income statement is the matching concept in this lesson.

2 Which term best matches this description: A report of assets, liabilities and equity at a point in time.

Show answer and explanation

Balance sheet

Balance sheet is the matching concept in this lesson.

3 Which concept would you apply first in a situation where a report grouping cash inflows and outflows by activity type.

Show answer and explanation

Cash flow statement

The scenario directly calls for Cash flow statement.

4 Name the concept described as: Accumulated earnings retained in the entity after distributions, subject to the accounting framework.

Show answer and explanation

Retained earnings

The intended concept is Retained earnings.

5 Which statement about Income statement is most accurate?

Show answer and explanation

A report of revenue and expenses over a period.

The definition in the lesson notes gives the required condition.

6 Explain one important difference between Income statement and Balance sheet.

Sample answer and marking guidance

Income statement: A report of revenue and expenses over a period. Balance sheet: A report of assets, liabilities and equity at a point in time.

Credit a clear distinction using both definitions and an appropriate example if supplied.

7 Give a short example showing how Cash flow statement would be used in practice.

Sample answer and marking guidance

A valid example should demonstrate this idea: A report grouping cash inflows and outflows by activity type.

Credit a relevant scenario that applies the concept rather than merely naming it.

8 Summarize why Retained earnings matters in the lesson “Financial statements”.

Sample answer and marking guidance

Retained earnings matters because Accumulated earnings retained in the entity after distributions, subject to the accounting framework.

Credit the core purpose, scope and any important limitation from the notes.

Further reading and review references

These are reference links, not copied exercises, institutional endorsement or proof of independent review.