ACCOUNTING AND FINANCIAL STATEMENTS

Accountancy and related professions  accountants  Accounts Department, Accounting Department bookkeeping-bookkeeper accounting-accountant auditing-auditor MK, p.95

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

profit, net profit, loss, revenues, sales, cash flow, gross profit 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 re ceived from selling goods and services 6.…………………money gained by selling something after taking away costs 7.…………………profit before taking away costs and taxes

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

Opposites  Debit  Appreciation  Debtor  Profit  Fixed assets/liabilities  Assets  Long-term  Tangible  Accounts payable  Credit  Depreciation  Creditor  Loss  Current assets/liab.  Liabilities  Short-term  Intangible  Accounts receivable

Cashflow Statement (operations, investments, financing): Inflows or Outflows?  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

Financial statements (RB p.33-35) Profit & Loss Account (P&L, IS): What does it show? What does revenue include? What do expenditures include? What happens with profits? Balance Sheet: 3 main pieces of information? Adjectives? Cashflow Statement: Where does cash come from and go to?

Financial statements Where 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.What are company profits generally used for? 4.Where does cash come from? What is it spent on? 5.What does equity include?

Accountants may have a specific focus… (MK, pp.95/96) Management/managerial accounting Tax accounting Cost accounting Historical cost accounting Replacement cost accounting ‘Creative’ accounting (!)

Listening, p.98 (MK)  Problem in valuation?  Profit?  Example? What is taken into consideration?

Translate the following (RB, pp.33-35): 1.Dobit nakon oporezivanja 2.Zalihe 3.Dugotrajna imovina 4.Dobit od redovnog poslovanja 5.Ukupne kratkoročne obveze 6.Zadržana dobit 7.Materijalna imovina 8.Prekoračenje računa 9.Sumnjiva i sporna potraživanja 10.Troškovi redovnog poslovanja 11.Nematerijalna imovina 12.Potraživanja 13.Amortizacija 14.Obračunato, a neplaćeno (adj.)

Assignment: Google’s annual report /d260164d10k.htm  SEC?  What firm audited Google’s annual report?  Which financial statements are included? Find the words covered in class.  Major risk factors? (Key words only)

Report writing Write a report on trends in Google’s assets in the period between 2007 and Use the information published on the Securities and Exchange Commission pages (see the slide before) and in the coursebook MacKenzie, I. (2010). English for Business Studies. Cambridge University Press).

Check your work  Layout: obligatory sections, graphic organization (e.g. Findings), name/date  Referencing the sources (Procedure)  General features of each section: content, clarity, concision, accuracy  Language: phrases, voc., sp/gr

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 Sheet Accounts Receivable P&L Account Common Stock Creditors Statement of Financial Position Additional Paid-In Capital Income Statement Net Income Profit AMS (ASM) Ordinary Shares Debtors Share Premium Accounts Payable

 How many accounting terms can you identify in the next slide? Source: MacKenzie, I. (1995) Financial English. LTP