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So I have to admit,

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this is hard to truly appreciate until you
get a solid understanding of accounting.

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And frankly, I did not have a strong
command of this until I built some

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financial forecasting models, integrating
the three financial statements together.

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But that's not gonna stop me from sharing
a few examples with you to guide you

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in the right direction to start
thinking more about this yourself.

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In fact, you may have already thinking
about this as this course progressed.

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And if not, don't worry about it.

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Let's start with the balance sheet.

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It is the snapshot of all the companies
different assets, liabilities and equity.

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The cash flow statement
shows the inflow and

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outflows associated with different
line items on the balance sheet.

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If you gross fixed asset line on
the balance sheet increases year on year,

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then you would expect to
see a cash outflow and

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the cash flow statement
investing activities section.

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As the values of different items
on your balance sheet fluctuate,

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you will see associated movements
on your cash flow statement.

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What about the PNL though?

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Well, the P&L captures revenue and
expenses for a given period of time.

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We discuss how the cash associated with
those revenues and expenses isn't always

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collected or disbursed at the same
time it shows up on the P&L.

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So, you can have accrued expenses or
deferred revenue on your balance sheet and

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you know that's gonna hit
the P&L at some point in time.

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Then there's also your
retained earnings or

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accumulated deficit line items in
the equity section of the balance sheet.

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That's driven by a combination of your net
income or net loss line items on the P&L,

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and dividends in the financing
section of the cash flow statement.

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So at a very high-level the P&L is
the summary of accrual accounting,

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revenue, and expenses for
the period of time, let's say a year.

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The cash flow statement
is that actual inflow and

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outflow of cash into your business for
the same year.

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And the balance sheet is
the snapshot of your assets,

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liabilities, and
equity at the end of the year, and also,

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the snapshot at the beginning
of your next year.

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Okay, well, we've reached the end of
the instructional part of this course.

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Shortly, you're gonna start the last quiz
in the Financial Statement Basics course

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at Treehouse.

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We've introduced you to a massive field
and hopefully sparked your curiosity and

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desire to learn more.

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Indeed, you now have a better
understanding of how to navigate each

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of the three major financial statements.

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Remember, it's completely
okay to ask questions and

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discuss things with your friends and
colleagues.

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That's just part of the fun.

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Just avoid asking the same
questions over and over again.

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That's not so fun for other people.

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Thanks so much for joining me in this
course and good luck with the quiz.