MEPX
Chapter 3 of 10All chapters
  1. 1What accounting is for
  2. 2The accounting equation
  3. 3The three statements
  4. 4Accruals and matching
  5. 5Profit against cash
  6. 6Bookkeeping in practice
  7. 7Reading the numbers
  8. 8Costs
  9. 9Controls and audit
  10. 10Reading a company report

Chapter 3 of 10

The three statements

Three views of the same business.

What each shows

The income statement covers a period: revenue, costs, profit. The balance sheet is a moment: what is owned and owed. The cash flow statement follows money actually moving.

  • Read all three; each hides something the others reveal.
  • The cash flow statement is the hardest to dress up.

How they connect

Profit flows into equity on the balance sheet. Cash movements change the cash balance. A change in any statement shows up in the others, which is what makes the set consistent.