ACCOUNTING AND FINANCIAL STATEMENTS

Accountancy and related professions

accountants

Accounts Department, Accounting Department

bookkeeping - bookkeeperaccounting - accountantauditing - auditor

MK, p.95

Accountants may have a specific focus

• Management/managerial accounting• Tax accounting• Cost accounting

• Historical cost accounting• Replacement cost accounting

MK:pp.95, 96, 98

Vital questions for any business

How much do we make? Do we have losses?

How much do we own? How much do we owe to others?

Where do we find cash if necessary? What do we use cash for?

Which financial statements answer the previous questions?

The Balance Sheet

The Profit and Loss Account -P&L(The Income Statement)

The Cashflow Statement

net profit, loss, revenues, sales, cash flow, gross profit

1. ………………… profit which remains after all costs, expenses and taxes have been taken away

2. …………………amount of money coming into and going out of a company

3. …………………spending more money than it is received

4. …………………total number of products that a company sells over a period of time

5. …………………money re ceived from selling goods and services

6. …………………profit before taking away expenses and taxes

Opposites?

1. Debit2. Appreciation 3. Debtor4. Profit5. Fixed assets/liabilities6. Long-term7. Tangible8. Accounts payable9. Revenue

Opposites?CreditDepreciationCreditorLossCurrent assets/liab.Short-termIntangibleAccounts receivableExpenditure

Opposites Debit Appreciation Debtor Profit Fixed assets/liabilities Long-term Tangible Accounts payable Revenue

Credit Depreciation Creditor Loss Current assets/liab. Short-term Intangible Accounts receivable Expenditure

Financial statements -revision 1Where can the following information be

found?

1. How much does a company owe? What does it own?

2. What are its sales and related costs and expenditure?

3. Where does cash come from? What is it spent on?

4. What does equity include?

Financial statements (RB p.70-75)

Balance Sheet: 3 parts? Adjectives used to describe them? What does each part include? Synonyms?

Profit & Loss Account(Income Statement:What does it show? What do revenues include? What do expenditures include? What happens with profits? Totals vs. expenses/deductions? Synonyms?

Cashflow Statement: What does it consist of? Where does cash come from and go to?

Cashflow Statement : Inflows or Outflows?

Operations -Investments- Financing?

Dividends paid Sales of property,

plant and equipment Income taxes paid Proceeds from issuing

shares Purchases of

property, plant and equipment

Receipts from the sale of goods and services

Repayment of debt

A few more terms used in accounting (MK, p.97): goodwill, share premium, common stock, pre-paid expenses, proceeds Source: Investopedia

1. costs such as rent, interest or insurance premium that are paid in advance

2. an intangible asset such as a strong brand name, good customer relations, good employee relations and any patents or proprietary technology

3. cash realized from a sale or received as a loan, after all commissions, expenses, fees, and taxes are deducted

4. the account to which the amount of money paid (or promised to be paid) by a shareholder for a share is credited to, only if the shareholder paid more than the cost of the share

5. a security that represents ownership in a corporation and gives rights to a company's assets only after creditors and preferred shareholders have been paid in full

Find the accounting terms that have the same meaning (AE & BE)

AGM Balance SheetAccounts Receivable

P&L AccountCommon Stock

CreditorsStatement of Financial Position

Additional Paid-In CapitalIncome Statement

Net Income Profit AMS (ASM)

Ordinary SharesDebtors

Share Premium Accounts Payable

Listening, p.98 (MK)

What intangible assets are mentioned?

Problems in valuation? Profit? Example? What is taken into

consideration? What is depreciation charged against?

Assignment: Google’s annual report

http://www.sec.gov/Archives/edgar/data/1288776/000119312513028362/d452134d10k.htm#toc1452134_12

SEC? What accounting firm audited

Google’s annual report for 2012? Which financial statements are

included? Major risk factors? (key words only)

Report writing

• Write a report on the trends in Google’s total assets in the period between 2008 and 2012.

Use the information published on https://investor.google.com/pdf/20121231_google_10K.pdf

Report writing – Checklist

Layout: title, headings, spacing, clear text organization (e.g. numbering), signature, name, position

Content: Task fulfilled? Makes sense? Language: a) phrases typically used in

a report, b) terminology, c)spell/gramm General features: accuracy, concision,

clarity, objectivity

Phrases: We strongly … that ... should … The key … are outlined below. The … of this report is to … the

possibilities … Information for this report was … from the

following sources: This report … to identify ..., The report was … by Kim Jam last week.

It was to be … by 15 March, 2014.

No conclusions were … regarding … It is … that the following should be done: It would be … if … This … a number of issues. Firstly, … Contrary to our expectations, it was …

that … The data for this report were … from the

following sources. Mark Smith, HR Manager, … this report on

incentive policies.

How many accounting terms can you identify in the next slide?

Source: MacKenzie, I. (1995) Financial English. LTP

Translate the following:

1. Dobit nakon oporezivanja2. Zalihe3. Dugotrajna imovina4. Dobit od redovitog poslovanja5. Ukupne kratkoročne obveze6. Zadržana dobit7. Materijalna imovina8. Prekoračenje računa9. Sumnjiva i sporna potraživanja10. Troškovi redovnog poslovanja11. Nematerijalna imovina12. Potraživanja13. Amortizacija14. Obračunato, a neplaćeno/nefakturirano (adj.)