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ACCOUNTING AND FINANCIAL STATEMENTS MK UNIT 19 RB, p. 32-36.

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Presentation on theme: "ACCOUNTING AND FINANCIAL STATEMENTS MK UNIT 19 RB, p. 32-36."— Presentation transcript:

1 ACCOUNTING AND FINANCIAL STATEMENTS MK UNIT 19 RB, p

2 BOOKKEEPERS, ACCOUNTANTS, AUDITORS enter data and record transactions in journals (ledgers) of companies accounts turn data into meaningful financial information, prepare financial statements are in charge of internal and external oversight of accounts Accountant vs. Bookkeeper: Small Business Financial Differences

3 FINANCIAL TRANSACTIONS EXPENDITURE (MAKING PAYMENTS) …to creditors …to the government …to shareholders …to suppliers INCOME (RECEIVING MONEY) …from debtors …from customers …from investors …from banks

4 THE ANNUAL REPORT COMPANY’S PERFORMANCE COMPANY’S PERFORMANCE  THE CHAIRMAN’S STATEMENT (overview)  DIRECTOR’S REPORT (principal activities)  AUDITOR’S REPORT (true and fair view of the accounts)  THREE FINANCIAL STATEMENTS RB p. 32

5 THREE FINANCIAL STATEMENTS PROFIT & LOSS ACCOUNT profitability BALANCE SHEET financial position of a firm at a particular time CASH FLOW STATEMENT liquidity

6 THREE FINANCIAL STATEMENTS PROFIT & LOSS ACCOUNT revenue/turnover - costs /overheads BALANCE SHEET assets=liabilities+owners’ equity CASH FLOW STATEMENT sources of funds v. applications of funds (cash inflow v. cash outflow)

7 ? This document provides aggregate data regarding all cash inflows a company receives from both its ongoing operations and external investment sources, as well as all cash outflows that pay for business activities and investments during a given quarter. Source: Investopedia

8 ? A financial statement that summarizes a company's assets, liabilities and shareholders' equity at a specific point in time. These three segments give investors an idea as to what the company owns and owes, as well as the amount invested by the shareholders. It must follow the following formula: Assets = Liabilities + Shareholders' Equity

9 ? A financial statement that summarizes the revenues, costs and expenses incurred during a specific period of time - usually a fiscal quarter or year. These records provide information that shows the ability of a company to generate profit by increasing revenue and reducing costs. It is also known as an "income statement".

10 REVISION 1 Bookkeepers _____ data in the books, accountants ____their work and ____certify that the accounts give a true and fair view of the financial situation. The Annual report consists of the ____ report, the ____ report and the ___statement. Profit and loss account shows _____ and _____. The balance sheet consists of ____, _____, and _____. The cash flow statement shows ___ and ___.

11 P&L: From top line to bottom line Revenues TOP LINE - Cost of sales = GROSS PROFIT - Operating expenses = EBITDA – Depreciation and amortization = EBIT -Interest - Taxes = NET PROFIT BOTTOM LINE P. 33

12 BALANCE SHEET ASSETS (to own) CURRENT ASSETS FIXED ASSETS OTHER ASSETS: GOODWILL LIABILITIES (to owe) CURRENT LIABILITIES LONG-TERM LIABILITIES OWNER’S EQUITY SHARE CAPITAL RETAINED PROFIT RESERVES

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14 FIXED, INTANGIBLE OR CURRENT ASSETS? FIXED PROPERTY PLANT EQUIPMENT LAND CURRENT CASH DEBTORS (ACCOUNTS RECEIVABLE) INVENTORY INTANGIBLE BRAND NAMES COPYRIGHT PATENTS TRADE MARKS

15 LIABILITIES CURRENT ACCOUNTS PAYABLE ACCRUED EXPENSES ACCRUED: recognized in the books before it is paid for LONG TERM DEFERRED INCOME TAX LONG-TERM DEBT (MORTGAGE, BONDS) P. 34

16 REVISION 2 PROFIT AND LOSS ACCOUNTBALANCE SHEET SORT OUT: REVENUE, FIXED ASSETS, COST OF SALES, CURRENT LIABILITIES, EQUITY, EBIT, GOODWILL, INVENTORY, OPERATING EXPENSES, ACCOUNTS PAYABLE, NET INCOME

17 REVISION 2 PROFIT AND LOSS ACCOUNT BALANCE SHEET REVENUE EBIT OPERATING EXPENSES COST OF SALES NET INCOME FIXED ASSETS EQUITY GOODWILL CURRENT LIABILITIES ACCOUNTS PAYABLE

18 CASH FLOW STATEMENT money coming into the business (inflows) money going out of the business (outflows) relating to OPERATING/INVESTMENT/FINANCING ACTIVITIES sale of goods, dividends, taxes, issuing shares etc. p. 35

19 REVISION 3 MK, p. 95 Vocabulary 1, 2, 3, 4 MK, p. 97 definitions o/play/goodwill/ o/play/operatingincome/ Aktiva Pasiva Prihod od prodaje Troškovi prodaje Dugotrajna imovina Kratkoročne obveze Dospjeli, ali neplaćeni troškovi Zalihe Potraživanja Amortizacija Materijalna imovina


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