Vocabulary

revenue – выручка, доход, денежные поступления

net income – чистый доход

gross sales – валовой объём продаж

returns – непроданный (возвращённый) товар

discount – скидка

net sales – чистый объём продаж

cost of goods sold – себестоимость реализованной продукции

gross profit (gross margin ) – валоваяприбыль

operating expenses – эксплутационныерасходы

selling expenses – торговыеиздержки

general expenses – общефирменные расходы

depreciation – амортизация, обесценение, износ

operating income – доход от основной деятельности предприятия

net loss – действительный убыток

amount of business – торговый оборот

overheads – накладные расходы

excess – излишек, избыток

Comprehension questions

1.What does the income statement show?

2. What does it summarize?

3.What figure is known as the “ bottom line”? Why is it important for owners, creditors and investors?

4.Give definitions to gross sales, net sales and the cost of goods sold.

5.How is gross profit obtained?

6.Differentiate between selling expenses and general expenses.

7.How is net income or loss computed?

8.What does a brief review of a company’s income statement reflect?

9.Why should revenue be greater than expenditure?

Statement of Cash Flows

In addition to preparing a balance sheet and an income statement, all public companies and many privately owned companies prepare a statement of cash flows. This third financial statement has several alternative names: the source and application of funds statement, the movements of funds statement, the funds flow statement, the statement of changes in financial position. As all these names suggest, this statement shows the flow of cash in and out of the business between balance sheet dates.

Cash is a company’s lifeblood. Cash includes currency and deposits in banks. Cash equivalents are short-term, temporary investments that can be quickly and easily converted to cash. Sources of cash include trading profits, depreciation provisions, borrowing, the sale of assets, and the issuing of shares. Applications of cash funds include the purchase of fixed or financial assets, the payment of dividends and the repayment of loans, and, in a bad year, trading losses.

The statement of cash flows reveals not only the increase or decrease in the company’s cash for the period but also the accounts that caused that change. This statement shows how a company’s cash was received and spent in three areas: operations, investments, and financing – for a period. In addition, an analysis of cash flows serves to indicate a firm’s liquidity (i.e. ability to pay short-term obligations).

Vocabulary

currency – 1) деньги (обычно наличные – банкноты, монеты)

2) валюта

deposits – вклад, депозит

short-term investments – краткосрочные инвестиции

application – применение, приложение

depreciation provisions – резервы на износ и амортизацию

repayment – оплата, погашение, возмещение

trading loss – убыток от торговли или производства

Comprehension questions

1.What does the statement of cash flows show? Give examples of its alternative names.

2.What is cash and its equivalents?

3 What sources are used for receiving cash?

4.How are cash funds used?

5. Identify three areas in which a company’s cash funds flow.