Understanding Financial Statements

Year 11 Business Studies – Management Processes

Topic: Finance
Sub-topic: Financial Statements (Cash Flow Statement, Income Statement, Balance Sheet)
Time: 55 minutes
Class Size: 3 students
Student Cohort: EAL/D (English as an Additional Language or Dialect) students
Curriculum Reference:
New South Wales Education Standards Authority (NESA) – Stage 6 Business Studies Syllabus (2010)
Preliminary Course: Topic 4 – Management Process – Finance

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Lesson Objectives

By the end of this lesson, students will be able to:

• Identify and describe three key financial statements used in business (cash flow statement, income statement, balance sheet).
• Understand the purpose and structure of each financial statement.
• Interpret basic information from simplified versions of each statement.
• Work collaboratively to construct a simple example of each statement using an interactive, scenario-based activity.

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Materials Required

• Whiteboard and markers
• Printed role-play cards (business scenarios)
• Simplified financial statement templates (printed)
• Sticky notes
• "Financial Flash" visual aids
• Printed EAL-friendly glossary (with bilingual support if possible)

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Differentiation for EAL/D Learners

• Use of visuals and colour-coded templates
• Pre-teaching key vocabulary
• Pair/small group activities with teacher support
• Sentence stems and guided prompts
• Use of real-world, relatable examples (local context)

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Lesson Breakdown (55 minutes)

⏱️ 1. Warm-Up Activity – "Finance Snap!" (5 minutes)

Goal: Activate prior knowledge and introduce key terms.
Instructions:

• Teacher quickly shows large flashcards with terms: cash, revenue, expenses, assets, liabilities, profit, loss.
• Students shout out what they think the word means or relate it to something they’ve seen/heard.
• Encourage use of mother tongue first, then support in translating to English.
• Teacher briefly explains the importance of understanding financial terms in business.

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⏱️ 2. Vocabulary & Visuals – "Financial Flashcards" (10 minutes)

Goal: Introduce and clarify key terms in financial statements.
Instructions:

• Distribute EAL-friendly glossary handout.
• Go through 3 mini visual posters (one each for: Cash Flow Statement, Income Statement, Balance Sheet).
• Discuss purpose and key terms (e.g., income, expenses, assets, liabilities, cash inflow/outflow).
• Teacher creates a “financial wall” on the board using sticky notes, placing keywords under each of the three types of statements.
• Students take turns coming up and placing matching vocab cards under the correct statement.

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⏱️ 3. Main Activity – "Run Your Business!" Group Simulation (25 minutes)

Goal: Apply understanding of financial statements through an interactive role-play game.
Instructions:

• Students are divided into pairs or a group of three, each acting as a team running a local café business.
• Each team receives a scenario card (with business events: sales, payments, asset purchases, loans, rent etc.).
• Students will record 3 financial documents from their scenario using simplified templates provided:
  • Cash Flow Statement (record inflows and outflows)
  • Income Statement (calculate profit or loss)
  • Balance Sheet (list assets, liabilities, and equity)

Teacher Role:

• Circulate to scaffold language.
• Encourage accounts to be filled in using the word bank from the visuals.
• Provide sentence stems: “Our cash inflow came from…”, “Our net profit is…”

Example Scenario Card: You made $5,000 from coffee sales, paid $2,000 in wages, purchased a coffee machine for $1,500, and borrowed $3,000 from the bank.

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⏱️ 4. Gallery Walk & Peer Review (8 minutes)

Goal: Reflect and reinforce learning through peer feedback.
Instructions:

• Students lay out their 3 completed financial statements on their desks.
• Each student rotates and views another group’s statements.
• They place a sticky note on each paper with one thing they:
  • ✅ Understood
  • ❓ Have a Question
  • 💡 Learned from it

Teacher Note:
Use this time to informally assess understanding and prompt discussion about WHY some mistakes may have occurred.

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⏱️ 5. Exit Ticket – "One Minute Accountant!" (5 minutes)

Goal: Review and consolidate.
Instructions:

• Each student receives a small card and must complete the sentence:
  • “The cash flow statement shows me ________”
  • “An income statement tells me _________”
  • “A balance sheet helps me see ________”
• Share aloud or hand in.

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Assessment & Evidence of Learning

• Informal teacher observation during activities
• Completed financial templates
• Peer review sticky notes
• Exit ticket responses

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Reflection (for the teacher)

After the lesson, consider:

• Did EAL/D students actively use the vocabulary?
• Were students able to connect statements to their purpose?
• What might need revision for next time: the level of scaffolding, pace, or types of activities?

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Extension / Homework (Optional)

Task: Choose a local business (e.g. a milk bar, bakery, or small grocer). Write THREE sentences explaining what might appear in each of their financial statements.
Use key terms and sentence starters from today's lesson.

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Curriculum Links – NSW Stage 6 Business Studies (Preliminary)

4.2 Content – Finance: Students learn to:

• Examine the role of financial information in the management process
• Describe and assess a range of financial statements including income statement, cash flow statement, and balance sheet
• Apply management processes to hypothetical or actual businesses

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Notes for Teacher

• Consider having bilingual glossaries in students’ native languages.
• Keep visual charts on the wall for future reference.
• You may adapt the business scenario to relate directly to student interests or family businesses.

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"Wow" Factor Takeaway

This lesson blends role-play, peer interaction, colour-coded scaffolds, and hands-on creation of real-world documents. With a focus on language support and engagement through doing, it’s a perfect match for small EAL/D classrooms. You don’t need digital tools to bring finance alive – just imagination, empathy, and clear visuals!