Lesson 4 (S6)

Understanding Financial Statements (Text)

Text:

Financial statements provide a snapshot of a company's financial health. There are three main types: the income statement, the balance sheet, and the cash flow statement. The income statement shows the company’s profits and losses. The balance sheet lists the company’s assets, liabilities, and equity. The cash flow statement tracks the cash coming in and going out of the business. Together, these documents give a comprehensive picture of the company’s financial situation.

     I. Comprehension Questions:

1. Name the three main types of financial statements.

2. What does the income statement show?

3. Why are financial statements important for a company?

      II.Grammar Questions:

1. Find an example of a compound sentence in the text.

2. What is the function of the word "Together" in the sentence: "Together, these documents give a comprehensive picture..."?

Key answers:

I. Comprehension Questions:

1. Name the three main types of financial statements.
   The three main types of financial statements are the income statement (the profit and loss statement ), the balance sheet, and the cash flow statement.

2. What does the income statement show?
   The income statement shows the company’s profits and losses.

3. Why are financial statements important for a company?
   Financial statements are important because they provide a comprehensive picture of the company’s financial situation, helping stakeholders understand its financial health.

II. Grammar Questions:

1. Find an example of a compound sentence in the text.
   Example: "The income statement shows the company’s profits and losses, and the balance sheet lists the company’s assets, liabilities, and equity."
   (This is a compound sentence because it joins two independent clauses with the coordinating conjunction "and.")

2. What is the function of the word "Together" in the sentence: "Together, these documents give a comprehensive picture..."?
   The word "Together" functions as an adverb modifying the entire sentence. It indicates that the combined effect of the documents provides a comprehensive picture of the company’s financial situation.