Accounting and financial statements

RAČUN? INVOICE / BILL / ACCOUNT / ACCOUNTS / CHECK (AE) / RECEIPT 1.a statement of money owed for goods or services supplied 2.a slip or ticket showing the amount owed, esp. a bill for food or beverages consumed (AE) 3.an itemized bill for goods sold or services provided, containing individual prices, the total charge, and the terms. 4.a written acknowledgment of having received a specified amount of money, goods, etc. 5.an amount of money deposited with a bank, as in a checking or savings account 6.a formal record of the debits and credits relating to the person, business, etc., named at the head of the ledger account

FILL IN THE GAPS. 1.Could we have the __________, please? 2.The _______ for the repairs came to $ My salary is paid into my bank ________. 4.Have you paid the phone _______? 5.The _________for last year showed a profit of $2 million. 6.The manufacturer sent the __________for two typewriters. 7.Make sure you are given a _______ for everything you buy. check/bill bill account bill accounts invoice receipt

RAISING CAPITAL  B _ rr _w money from family and friends  _pply for a l _ _ n (must be paid back with interest)  a public limited companies can _ ss _ _ shares or equites  they can issue also b _ _ _s (loans that pay interest and are repaid at a fixed date)

In accounting : LIABILITIES – money that is owed to other people or businesses → DEBT ASSETS – all the things that a company owns RB, P 69

Financial reporting  To keep the accounts=voditi računovodstvo  Recording of financial transactions: money received (income) - credits money paid out (expenditure) - debits  Why? →to see how much a business is earning and how much it has to pay →to see who owes the company money (debtors) and to whom it owes money (creditors)  Each type of transaction is entered in a record known as an account  Ledger → book in which accounts are written (glavna knjiga)

People involved in accounting: ( auditors, bookkeepers, accountants) ________ enter data and keep financial records (ledgers) of companies’ accounts. ________ check and examine the accounts prepared by_________. ________ (internal and external specilists) are in charge of the oversight.

The annual report, p. 70 RB  Why is it prepared?  It consists of three parts: (auditor’s, director’s, chairman’s) 1. _______ which gives an overview of the company’s past and present situation 2. _______ which shows principal activities of the business, the results and dividends, investments, employment policies 3. _______ granting the accounts give a “true and fair view” of he company’s financial performance  _____ companies have to publish it annually.

FINANCIAL STATEMENTS 1. PROFIT AND LOSS ACCOUNT - GB (INCOME STATEMENT – US) 2. BALANCE SHEET 3. CASH FLOW STATEMENT

The balance sheet RB, p71 1 What are the two sides in the balance sheet? On one side are the _____ which show ……. On the other side are the company’s _______ and its ___________ 2 What are liabilities and what do they include? 3 What does shareholder’s equity or capital consist of? It consists of ___________ Part of it is _______ _____, the money raised by ___ Part of it includes _______ _______: profits from ….. 4 How should assets, liabilities and capital balance?

An accounting equation for the balance sheet: ASSETS=LIABILITIES + CAPITAL A= L + C

Fixed assets:long-lasting and required for making the company’s products and services Current assets: include stock, cash, debtors, money owed by customers (day to day operations) Long-term liabilites: loans (after at least 12 months) Current liabilities: creditors, suppliers of goods on credit, bank overdraft (amounts payable within 12 months)

Tangible assets Intangible assets Buildingsknow-how Equipment patents Landcopyright brand name goodwill (reputation) contacts, customers skilled staff and management

Make three groups out of the following terms AssetsLiabilitiesEquity Buildings, long-term, shares, overdraft, machinery, vehicles, loans, fixed,, current, stock, reserves, cash, creditors - money owed to suppliers, debtors - money owed to the company by customers

The three groups AssetsLiabilitiesEquity fixed, buildings, machinery, vehicles, current, stock, cash, debtors Long-term, loans, current, creditors, overdraft, Shares, reserves

The Profit & Loss account or Income statement (US) RB, p74 Shows: The difference btw the _____ and _____ of a period. Includes: At the top of the statement is the total ____ ____ or ______, next is the ____ of ____, also known as cost of ______ ______ (COGS). The _____ ______ is the differnce btw the sales revenue and the cost of sales.

SG&A is one name for s_____, g______ and a______ expenses. EBITDA stands for earnigs before interest, tax, depreciation and amortization EBIT stands for earnigs before interest and tax

Purpose: _____ net profit and see the profitability of the company. Key equation: Net Profit = Revenue – Costs Profit distribution: The profit can be distributed as _____ or transferred to ________.

net profit, creditor, loss, revenue, sales, cash flow, overheads, gross profit, liabilities, equities, assets, debtor 1.………………… profit which remains after all costs 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 received from selling goods and services 6.…………………profit before taking away costs and taxes 7.…………………money owed by a company 8.……………….. items of value belonging to a person or a company 9. ………………. regular costs (rent, salaries, heat, lighting, etc. ) 10.………………. person who owes money 11.………………. person to whom money is owed 12.………………. another name for ordinary shares

net profit, creditor, loss, revenue, sales, cash flow, overheads, gross profit, liabilities, equities, assets, debtor 1.Net profit - profit which remains after all costs and taxes have been taken away 2.Cash flow - amount of money coming into and going out of a company 3.Loss - spending more money than it is received 4.Sales - total number of products that a company sells over a period of time 5.Revenue - money received from selling goods and services 6.Gross profit - profit before taking away costs and taxes 7.Liabilities - money owed by a company 8.Assets - items of value belonging to a person or a company 9. Utilities - regular costs (rent, salaries, heat, lighting, etc. ) 10. Debtor - person who owes money 11.Creditor - person to whom money is owed 12. Equities - another name for ordinary shares

The P&L Account  Use the words: dividend, costs, growth, taxation, turnover, revenue  The amount of business (sales) done during a year is _____. (sales)  All the money received during a period is ___.  All the expenditure together is called :_____  What happens to profit? (3)‏  A)Part of it goes to the government in __________  B)Part of it to shareholders as a _________  C)Part is retained by the company for further _____.

The cashflow statement RB, p 75

What does the cash flow statement consist of? What are operating, financing and investing activities of a company? What does a cash flow statement show? What can company do with cash surplus?

Cash inflows = sources of funds (the money that comes in the company) Cash outflow = applications of funds (the money that goes out of the company) It shows how well the company manages cash It shows the liquidity of a company – whether it has cash to pay its liabilities or assets that can be easily converted into cash 3 categories of activites: cash flow provided from: operating investing financing

Cash surplus – if there are more inflows than outflows Cash deficit – if there is more cash outflows than cash inflows

MATCH THE WORDS TO MAKE WORD PARTNERSHIPS: 1.profit &a) assets _______________________ 2.balanceb) money _______________________ 3.cash flowc) loss account __________________ 4.borrowd) funds ________________________ 5.annuale) sheet ________________________ 6.currentf) report ________________________ 7.Sources of g) statement ____________________

MATCH THE TERMS WITH THE DEFINITIONS: stock, gross profit, accounting, assets, depreciation, audit, dividends, creditors, overheads, net income, debtors, bookkeeping, revenue 1. Keeping financial records, recording income and expenditure, valuing assets and liabilities, giving financial forecasts. ___________________ 2. Writing down the details of transactions, debits and credits.__________________ 3. An official inspection of business and financial records. ____________________ 4. All the money that a company will have to pay to someone else in the future._______________________ 5. Anything owned by a business.__________________ 6. Sums of money owed by customers for goods or services purchased on credit.______________________ 7. Raw materials, work in progress, and finished goods stored ready for sale. ________________ 8. Regular costs such as rent, electricity, wages, etc.__________________ 9. The reduction in value of a fixed asset during the years it is in use. ______________ 10.Money received from the sale of goods or services. ________________ 11.The total amount, without anything taken away. _______________ 12.An amount after all deductions have been made. ____________ 13. Payment to shareholders when a company has made profit. ______________

Fill in the missing words: The profit and _______account shows if a company is receiving more money than it’s spending. If you don’t like taking risks, you should only ________in very successful companies We sold a lot more last year, so our ____________went up. Everyone who buys a share ____________part of the company. Thirty per cent of our profits goes straight to the government in _____. Net profit is the difference between revenue and _________________. Even they saw our financial statements, the bank refused to _________us any more money. I think this is a good investment: it pays 8% ___________. Another term for net profit is bottom ________.

Sort the following into types of assets: building cash in the bank debtors goodwill investments human capitalstock land reputation Current assets Fixed assets Intangible assets ____________ ______________ _____________ _____________ ______________ _____________

Vocabulary Plaćanje Rashodi Primanje novca Prihod Računovodstvo Račun, konto Unositi podatke Knjiga (računovodstvena evidencija) Dugovati dužnici Vjerovnici Godišnji izvještaj

Vocabulary – Key Plaćanje – payment Rashodi - expenditure Primanje novca – receiving money Prihod - income Računovodstvo - accounting Račun, konto - account Unositi podatke – enter Knjiga (računovodstvena evidencija) – account book Dugovati - owe Dužnici - debtors Vjerovnici - creditors Godišnji izvještaj – annual report

What do these words mean? Revenue Assets Overheads Net Dividend Depreciation Debtor Equities Creditor Liabilities Gross

What do these words mean? - KEY Revenue – prihod od prodaje Assets – imovina (dugotrajna i kratkotrajna) Overheads – opći, indirektni troškovi Net - neto Dividend - dividenda Depreciation (AmE), amortization (BrE) – amortizacija dugotrajne imovine Debtor – potraživanja Owners’equities, shareholders’ equities (funds, BrE) – temeljni kapital, kapital, vlastiti kapital Creditor – vjerovnik Liabilities – pasiva, obveze, dug (kratkoročne i dugoročne) Gross – bruto