Vocabulary

balance sheet – балансовый отчет

income statement – отчет о прибылях и убытках

statement of cash flows –отчет о движении наличности

assets – 1.актив (баланса); 2. имущество

liability – 1) обязательство; 2) pl. пассив

shareholder – держатель акций, акционер

owners’ equity – акционерный (собственный) капитал, доля

собственников

current assets – оборотный капитал, текущие активы

marketable securities – рыночные ценные бумаги

accounts receivable – счета к взысканию, счета дебиторов; предстоящие

поступления

fixed assets – основной капитал

long-term investments – долгосрочные инвестиции

liquidity – ликвидность (мобильность активов предприятий,

обеспечивающая своевременную оплату их обязательств)

claim – платёжное требование, претензия

owe – быть в долгу, задолжать

subtract – вычитать

current liabilities – краткосрочные обязательства

long-term liabilities – долгосрочные обязательства

accounts payable – счета к оплате; счета кредиторов

notes payable – векселя к оплате

accrued expenses – аккумулированные непогашенные затраты

fall due – подлежать уплате; наступать (о сроке платежа)

bond – облигация, долговое обязательство

share capital – стоимость имущества компании, заключенная в акции

retained earnings – распределенная прибыль

net assets – чистые нетто-активы (стоимость капитала минус сумма

долговых обязательств)

accounting equation – бухгалтерская сбалансированность

double-entry bookkeeping system – система двойной записи, двойная

бухгалтерия

snapshot – снимок, фотография

baseline – граница

Comprehension questions

1. What are the three financial statements most companies include in their annual reports?

2. What does the balance sheet show? Identify its three main sections.

3. What do businesses’ assets consist of? Differentiate between current assets and fixed assets.

4. Give the definition of liquidity.

5. What are claims against assets called?

6. Characterise the liabilities section of the balance sheet. What are current liabilities and what do they include?

7. Define long-term liabilities and give examples of them.

8. What is owners’ equity? What does it include?

9. State the basic accounting equation. What does it show?

10. What is the purpose of double-entry bookkeeping?

11. Explain the significance of the balance sheet for internal and external users.

12. Why is the balance sheet considered a snapshot of a company’s financial position on a particular date?

13. Why is this statement called a balance sheet?

Income Statement

If the balance sheet is a snapshot, the income statement is a movie. The income statement shows how profitable the organization has been over a specific period of time, typically one year. It summarizes all revenues (or sales), the amounts that have been received from customers for goods or services, and all expenses, the costs that have arisen in generating revenues.

Expenses and income taxes are then subtracted from revenues to show the actual profit or loss of a company, a figure known as net income– profit or the “bottom line“. Owners, creditors and investors can evaluate the company’s past performance and future prospects by comparing net income for one year with net income for previous years.

Gross sales is the total dollar amount of goods sold. When returns and discounts are deducted from gross sales, the result is termednet sales. The actual cost of items that were sold during a period is known asthe cost of goods sold. Cost of goods sold is deducted from net sales to obtain a company’sgross profit– a key figure used in financial statement analysis.

In addition to the costs directly associated with producing goods, companies subtract operating expenses, which includeselling expenses andgeneral expenses. Selling expenses are the costs of marketing and distributing products, including advertising and the salaries of sales personnel.General expenses arise from the overall operation of a business and include office salaries, professional services (e.g. accounting and legal fees), and depreciation of office equipment. When total operating expenses are then deducted, the result is calledoperating income.

Finally, operating expenses and income taxes are subtracted from gross profit to compute the company’s net income or loss for the period. By briefly reviewing a company’s income statements one can have a general sense of the company’s size, trend in sales, major expenses, and the resulting net income or loss. In the long run the amount of business done by the company during the year should be greater than its costs and overheads: there should generally be a profit – an excess of income over expenditure.