TASK 2. Match the five kinds of accounts from the left-hand column with their definitions from the right-hand one. What statements use them?

1) assets a) expired costs

2) expenses b) things owned

3) income c) amounts owed

4) liabilities d) owners' investment

5) net worth e) sales revenue

 

TASK 3. Choose the best explanation to show the meaning of each of the expressions below.

Revenue (turnover)

a) total value of production in one year;

b) complete change of production methods;

c) total value of sales in period of time;

d) change from making a big loss to making a profit

 

Gross margin

a) the difference between selling price and cost of manufacture, minus factory overheads;

b) a large-scale production method used in some countries;

c) the same as gross profit;

d) the total value of goods remaining unsold at the end of the year

 

Overall gross profit

a) money remaining after all costs including tax have been deducted;

b) same as net profit;

c) same as gross profit;

d) excess profit over previously estimated figure

Sales

a) act of selling;

b) money received for selling smth.;

c) offering smth. for sale;

d) examining the repots to see why items have or not sold well costs

a) money paid for doing smth. in the course of business, but not for manufacturing a product or for purchasing stock;

b) amounts of money spent;

c) amount of money which has to be paid for something;

d) money spent

Expenses

a) money paid for doing smth. in the course of business, but not for manufacturing a product or for purchasing stock;

b) amounts of money spent;

c) amount of money which has to be paid for something;

d) money used by a company, provided by shareholders

Expenditure

a) money paid for doing smth.in the course of business, but not for manufacturing a product or for purchasing stock;

b) amounts of money spent;

c) amount of money which has to be paid for something;

d) money used by a company, provided by shareholders

 

VOCABULARY FOCUS

TASK 1. Match the phrase on the left with the definition on the right.

	1)profit	a)	the difference between sales revenue and the costs of the
			goods which were sold
	2)gross profit	b)	the final profit after adding any other revenues and
			deducting any other expenses
3)	net profit	c)	total value of production in one year
4)	turnover	d)	same as gross profit
5)	overall gross	e)	the difference between the revenue earned by a business
	profit		and the expenses consumed in earning that revenue

 

TASK 2. Give your versions to finish the sentences below.

1. Auditors are supposed to make sure that companies follow their stated____.

2. Companies can choose from a variety of ___but they are not allowed to change them too often.

3. Lots of money obtained in dubious or illegal ways is deposited in __

____in Swiss banks.

4. The basic ____is Assets = Liabilities + Owners' Equity.

5. The ____at the London Stock Exchange usually lasts two weeks. It is

followed by an ____on which all bills must be settled.

6. The ______ is one of the three basic financial statements.

 

 

7. ___ consist of money that is expected to be received. The contrary,___consist of money that is owed to other people.

8. The role of____is to provide figures and statements that will aid decision-making.

 

TASK. 3. Classify the words in the box into four groups, according to the headings below.

Accounts payable	Net profit	Amortization	Posting
Annuity system	Prudence	Below the line	Reducing balance
Income-statement	Reserves	Deferred	Straight line
		liabilities	method
Double-entry	Separate-entry	Going-concern	Scrap value
Consistency	Trial balance	Journal	Unit-of-measure
Ledger	Writing off	Matching	Voucher
Bookkeeping	Accounting Principles	Depreciation	Financial Statements

 

 

TASK 4. Which of the words in Task 9 above do the following sentences define.

1.____________

A term to describe "extraordinary" items placed after the net profit total in a profit and loss account, which perhaps make the profit appear higher than it really is.

 

2.____________

A way of depreciating an asset which involves estimating the number of years it will be used, and then dividing its historical cost by this number.

3._________

Money that a company will definitely have to repay in the future, but not during the current financial year.

 

4._________

The accounting principle which assumes that a business will still be functioning next year and thereafter.

5.__________

The American name for the entry on a balance sheet that shows how much money a business owes its suppliers for purchases made on credit.

6.___________

The American name for what in Britain is usually called a profit and loss account.

7._________

The accounting principle that requires multinational companies to produce consolidated balance sheets in a single currency.

8.________

The part of a company's profit that is retained for future reinvestment, rather than distributed as a dividend.

TASK 5. Replace underlined words by synonyms given below.

The income statement is used to compare income and expense results with the pro forma targets for the period for which it was prepared. By evaluating the income statement results it is possible to compare actual results to pro-forma targets and make improvements as needed.

The period usually lasts for one year. This is the period of time statement. It lists the accounting period and the date it was finished. Most income statements are for 12 months, beginning the month the business began and lasting for a year. This makes easier accounting and tax planning.

The cost of the goods sold is subtracted, resulting in a gross margin. From this gross profit the current expenses are subtracted and the balance is called net profit.

Net profit usually includes the owner's or owners' salary as well as the return on investment. A company to work successfully owners have to find ways to increase sales or reduce expenses.

 

a) performance	b)	income	c) revenue	d) covered
e) is running	J)	covered	g) profitably	h) completed
i) target set	j)	operating	k) simplifies	I) adjustments

 

TASK 6. Complete the following passage using the words from the box.

The financial information in the balance sheets used by___1___to tell the shareholders the return on their capital. This is the amount of___2____expressed as a___3___of the capital invested in the company. The___4___who provided the capital are interested in_5_which are paid out of the profits.

The capital of the company consists of fixed assets and current assets minus ____6___

To calculate___7___you work out what the net profit was as the percentage of the capital.

But the___8____given at the end of the year was__9___during the year, while the figure for the capital___10___is what it was at the end of the year. So, to be more accurate, we should work out the___11___of capital employed for the year. This can be done by taking____12___at the beginning and the end of the period and taking the average.

 

a) current liabilities	b) profit	c) dividends	d) net profit
e) shareholders	f) figures	g) employed	h) managers
i) the return on the capital	j) earned	k) average	1) percentage

TASK 7. Find one word for each numbered gap.

a) forecasts b) meetings c) summary d) money e) Auditor's

f) activities g) shareholders h) dividends i) coming j) five

k) required I) annual m) Accounts n) position o) auditing

p) share operations

A. Each year the Office Computers publishes its Annual Report and (1)

____for the financial year. The report begins with a statement to the (2)

_____by the chairperson. In it he or she reviews the results of the past

year and (3)____what will happen in the (4)____year. (Note that a company in Britain can start its financial year in any month and so (5)_____work is spread evenly throughout the year.)

 

 

Next comes the Board of Directors' report which is (6)____by low. This

gives an account of the (7)______of each director, of the group, of the

group's employment policy and of (8)_____given to political parties and

charities.

The (9)_____Accounts report to shareholders on the financial results of

the group's (10)_______during the past year and show the financial (11)

______at the end of the year. The accounts are followed by the (12)_____Report and include the following reports:

• Consolidated Profit and Loss Account

• Consolidated Balance Sheet

• Cash flow statement

• Statement of Accounting Policies

• Notes to the Accounts

The document also includes a (13)___-of the financial results for the

past (14) _____ years and gives general information about the company's (15) ______ capital and the timetable for shareholders'

(16)______and the payment of (17)________.