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Understanding financial statements

The aim of this course is to help you understand and interpret three types of financial statements. The first statement summarises the financial aspects of an organisation’s operations over a particular period. The second is a snapshot of what the organisation owned and what they owed on the final day of the defined period. The third type of statement explains how the organisation generated cash and what they did with it. The exact details of how financial statements are prepared (and audited by independent persons) vary between the different classes of organisation but at their root they all prepare three statements.

Standalone study only

You will not be awarded credits for studying this course. It is available for standalone study only and cannot be counted towards an OU qualification.

Short course

Short course code



This is a non-credit bearing course.

Study method

Short course cost

Entry requirements

What you will study

This course will help you develop a general understanding of financial reports and comprises of four units:

Unit 1: General purpose financial reports
This is a foundation for the course as it covers some basic accounting concepts so you can understand what the main financial statements produced by businesses and government organisations are intended to do.

Unit 2: The income statement
This unit looks at revenue and expenses and how a profit or a loss is the result of many judgements.

Unit 3: The balance sheet (statement of financial position)
This is a snapshot of an organisation’s financial position at a point in time. You'll learn about assets, liabilities and the net worth of an organisation. It also includes a brief explanation of the statement of changes in equity.

Unit 4: Statement of cash flows
The statement of cash flows explains where an organisation gets its cash and what it spends it on. The income statement explains the change from one balance sheet to the next in terms of resources; the cash flow statement explains it in terms of cash received and spent.

You will learn

By studying this course you will be able to:

  • describe general purpose financial reports
  • explain the terms assets, liabilities, revenue, expenses and equity
  • know the difference between a profit and a cash surplus
  • use a balance sheet to estimate the net worth of an organisation
  • explain how the three financial statements fit together and provide management information.

Learner support

This course was designed to be independently studied with no tutor support. StudentHome is a dedicated website that provides general study support and there is a computing helpdesk. 

Teaching and assessment


There an end-of-course quiz to test your knowledge and understanding. Once completed and successfully passed you will receive a digital badge and a course completion certificate which you can download as a record of your learning.


As a student of The Open University, you should be aware of the content of the academic regulations, which are available on our Student Policies and Regulations website.

    Entry requirements

    There are no formal academic requirements.

    If you have any doubt about the suitability of the course, please contact us.

    Course length

    The course will require around 10 hours to complete.

    You can begin at any time during the life of the course and study at your own pace.


    Start End England fee Register
    At anytime before registration end date Oct 2024 - see Entry requirements for more detail £150.00

    Registration closes 30/04/2024


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    In the meantime, explore our overview of Fees and funding.

    Can you study an Access module for free?

    In order to qualify, you must:

    1. be resident in England
    2. have a personal income of less than £25,000 (or receive qualifying benefits)
    3. have not completed one year or more on any full-time undergraduate programme at FHEQ level 4 or above, or completed 30 credits or more of OU study

    How to apply to study an Access module for free

    Once you've started the registration process, either online or over the phone, we'll contact you about your payment options. This will include instructions on how you can apply to study for free if you are eligible.

    If you're unsure if you meet the criteria to study for free, you can check with one of our friendly advisers on +44 (0)300 303 0069 or you can request a call back.

    Not eligible to study for free?

    Don't worry! We offer a choice of flexible ways to help spread the cost of your Access module. The most popular options include:

    • monthly payments through OUSBA
    • part-time tuition fee loan (you'll need to be registered on a qualification for this option)

    To explore all the options available to you, visit Fees and Funding.

    What's included

    All learning materials, exercises, study support and end of course quiz are delivered entirely online. 

    Computing requirements

    You'll need broadband internet access and a desktop or laptop computer with an up-to-date version of Windows (10 or 11), or macOS (11 'Big Sur' or higher).

    Functionality may be limited on mobile devices. For example, voice recorder activities, which are common in language short courses, may not work on iOS/Apple devices.

    Our module websites comply with web standards and any modern browser is suitable for most activities.

    Our OU Study mobile App will operate on all current, supported versions of Android and iOS. It's not available on Kindle.

    It's also possible to access some module materials on a mobile phone, tablet device or Chromebook. However, as you may be asked to install additional software or use certain applications, you'll also require a desktop or laptop as described above.

    If you have a disability

    The course is delivered online and makes use of a variety of online resources. If you use specialist hardware or software to assist you in using a computer or the internet you are advised to contact us about support which can be given to meet your needs.

    The OU strives to make all aspects of study accessible to everyone and this Accessibility Statement outlines what studying BGXS006 involves. You should use this information to inform your study preparations and any discussions with us about how we can meet your needs.