ACCOUNTING AND
FINANCIAL STATEMENTS
Accountancy and related professions
 accountants
 Accounts Department, Accounting Department
bookkeeping accounting auditing
MK, p.95
bookkeeper
accountant
auditor
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.
2.
3.
4.
5.
6.
7.
8.
9.
Debit
Appreciation
Debtor
Profit
Fixed assets/liabilities
Long-term
Tangible
Accounts payable
Revenue
Opposites?
Credit
Depreciation
Creditor
Loss
Current assets/liab.
Short-term
Intangible
Accounts receivable
Expenditure
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 1
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. 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 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
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/1288776/0001193
12513028362/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/2012
1231_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.
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



 How many accounting terms can you
identify in the next slide?
Source: MacKenzie, I. (1995) Financial English. LTP
Translate the following:
1. Dobit nakon oporezivanja
2. Zalihe
3. Dugotrajna imovina
4. Dobit od redovitog 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/nefakturirano (adj.)