7. Interpreting Financial Reports

Introduction

This Learner Manual addresses the Unit of Competency LGACOR011 Analyse financial reports and budgets.

The Learning Objectives are:

·       Summarise the purpose of a Profit and Loss Statement.

·       Summarise the purpose of a Balance Sheet.

·       Summarise the purpose of a Cash Flow Statement.

·       Summarise the legal requirements for financial management of organisations.

·       Describe the purpose of financial policies and procedures in an organisation.

 

Interpreting Financial Reports 
Profit and Loss Statement

A Profit and Loss Statement is, perhaps, the most important financial statement and may also be known as: 

·       Income and expenditure statement. 

·       Operating statement. 

·       Revenue statement. 

·       Monthly profit and loss report. 

This statement shows all of the income and expenditure during a specified period usually a month, a quarter or fiscal year of the organisation’s operations. This means everything that the organisation received and spent. 

It also shows how much was budgeted for each item, that is, how much money is put aside to be spent or how much money the organisation thought it would receive.