Reading Financial Statements
Balance Sheet, Income Statement, Cash Flow Statement, Ratios and Accounting Methods
NFPA 70 National Electrical Code, 2023 edition · Reviewed 2026-09-21
"Interpretation of Financial Statements and Reports" sits in Part 1 of both Georgia exams, under "Comply with Administrative Requirements" (4 percent of the exam). The questions are definitional and arithmetic: which statement shows what, the accounting equation, current versus long-term, gross profit versus net profit, working capital, a few ratios, and cash versus accrual accounting. The SEC's plain-English guide is the source text here; the IRS publications cover the accounting-method and depreciation rules.
1. The three statements — what each one shows
| Statement | Shows | Time frame |
|---|---|---|
| Balance sheet | What the company owns (assets), what it owes (liabilities) and the owners' equity | A fixed point in time — a snapshot at the end of the period |
| Income statement (profit-and-loss) | How much the company earned and spent — revenues, costs, expenses, net profit or loss | Over a period (a year or part of one) |
| Cash flow statement | Cash received and paid — operating, investing and financing activities; whether the company generated cash | Over a period |
| Statement of owners'/shareholders' equity | Changes in the owners' interest | Over a period |
- The statements are related: balance-sheet changes show up as income-statement revenues and expenses, and cash flows explain the cash asset. No single statement tells the whole story.
The rest of this lesson is for members.
The rest of this lesson, its quiz, all 7 lessons in this module and every mock exam open with the 7-day pass for $9. If you keep going, that $9 comes off lifetime.