III. Vocabulary practice exercises

1. Use the following terms to complete the definitions below:

current assets marketable securities general expenses fixed assets balance sheet revenue liabilities income statement owners’ equity accounts receivable cost of goods sold cash flow accounts payable double-entry bookkeeping net income

1. ------------ is the total amount of money received from the sale of goods or services, as well as from related business activities.

2. ------------ are operating expenses, such as office and administrative expenses, not directly associated with creating or marketing a good or service.

3. ------------ means profit or loss earned by a firm, determined by subtracting expenses from revenues; also called the bottom line.

4. ------------ include cash and other items that will or can become cash within the course of a calendar year.

5. ------------ are defined as claim against a firm’s assets by creditor.

6. ------------ is a financial record of a company’s revenues, expenses, and profits over a given period of time.

7. ------------ are long-term investments in land, buildings, machinery, equipment, and other property used in running the business.

8. ------------ are stocks, bonds, and other investments that can be turned into cash quickly.

9. ------------ mean money owed a company by its clients or customers who have promised to pay for the products at a later date.

10. ------------ is a “snapshot” of an organization’s financial position at a given moment.

11. ------------ is the amount a company owes to suppliers for goods and services purchased with credit.

12. ------------ is the actual cost of producing or acquiring a company’s products for sale during a given period.

13. ------------ is the movement of money through an organization over a daily, weekly, monthly, or yearly basis.

14. ------------ is a portion of a company’s assets that belongs to the owners after obligations to all creditors have been met.

15. ------------ is the way of recording financial transactions that requires two entries for every transaction so that the accounting equation is always kept in balance.

2. A. Each country has a different set of rules that the businesses within that country use for their accounting process and financial statements. The table below lists a few common equivalent terms that should help you discover their meaning in accounting statements.

Term	Equivalent Term
Revenues	Sales
	Goods or services sold
Gross profit	Gross income
	Gross earnings
	Gross margin
Operating income	Operating profit
	Earnings before interest and taxes (EBIT)
	Income before interest and taxes (IBIT)
Income before taxes (IBT)	Earnings before taxes (EBT)
	Profit before taxes (PBT)
Net income (NI)	Earnings after taxes (EAT)
	Profit after taxes (PAT)

B. Match up the following British and American terms:

British: American:

1. creditors a. accounts payable

2. the profit and loss account b. stockholder

3. stocks c. overhead

4. shareholders’ funds d. accounts receivable

5. current account e. annual meeting

6. shareholder f. amortization

7. stocks g. owners’ equity

8. trade unions h. accounting firm

9. Financial Reporting Council Standards i. labor unions

10. accountancy firm j. Generally Accepted

Accounting Principles

11. depreciation k. inventory

12. debtors l. checking account

13. annual general meeting m. income statement

3. Listed below are some items found in the financial statements for Alpine Sports, a company producing sportswear and gear. Indicate in which financial statements the following items would appear.

a. Accounts receivable b. Revenue c. Gross Profit d. Net cash used in investing e. Marketable Securities f. Retained Earnings g. Operating Expenses h. Net increase / decrease in cash i. Net Sales

j. Property and Equipment k. Common Stock l. Net Income m. Beginning Inventory n. Accounts Payable o. Purchase of securities p. Cash and cash equivalents at end of year q. Accrued Expenses

Balance Sheet Income Statement Statement of Cash Flows

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4. Replace the underlined words with their equivalents given below:

receivables owners’ equity depreciation income statement payables deducted gross margin net income revenues statement of cash flows fiscal goodwill short-term

1. Many companies prepare a balance sheet at least once a year, most often at the end of the financial year.

2. Current assets are those that are used or converted into cash within the course of a calendar year.

3. For example, if you buy gas and engine oil with a BP credit card, the purchase represents accounts payable for you and accounts receivable for BP.

4. Fixed assets also include intangible assets, such as corporate reputation, as well as patents and trademarks.

5. Some assets such as machinery and equipment lose their value over time because they wear out or are no longer up-to-date. This is called amortization.

6. If liabilities are subtracted from assets (assets – liabilities) the amount remaining is the owners’ share of a business.

7. The bottom line is the final figure on the profit and loss account.

8. The cost of goods sold is deducted from sales to obtain a company’s gross profit.

9. The third primary financial statement is called the statement of changes in financial position.

5. Substitute the Russian words and word-combinations in brackets for their

English equivalents. Consult the texts and vocabulary to texts.

1. The best-known examples of financial statements are (балансовый отчёт,

отчёт о прибылях и убытках и отчёт о движении денежных средств).

2. The balance sheet lists (актив компании, пассив и долю собственников).

3. To divide the asset section of the balance sheet into (оборотный капитал

и основной капитал).

4. Current assets include (наличные деньги, ценные рыночные бумаги,

счета к получению и товарно-материальные запасы).

5. Fixed assets include (долгосрочные инвестиции в землю, здания,

оборудование и нематериальные активы,) such as corporate (гудвилл,

патенты, авторские права и торговые знаки).

6. Assets are listed (в нисходящем порядке по ликвидности).

7. To divide the liabilities section of the balance sheet (на краткосрочные

обязательства и долгосрочные обязательства).

8. Current liabilities include (счета к оплате, векселя к оплате и

аккумулированные непогашенные затраты).

9. The investment of the owners in the business is called (доля собственников).

10. The company reserves include (нераспределённую прибыль).

11. To keep (главное бухгалтерское уравнение) in balance

12. To use (систему двойной записи) when each business transaction

(должна быть записана на двух отдельных счетах).

13. To subtract expenses from revenues to get (чистый доход).

14. The total dollar amount of goods sold is called (валовой объём продаж

15. The final figure on the income statement is known as (чистый доход или

последняя строчка в отчёте).

16. To deduct the cost of goods sold from sales (чтобы получить валовую

прибыль компании).

17. To deduct (операционные расходы), which include both (торговые

издержки и общефирменные расходы).

6. In the word-box below you should be able to find – horizontally (left to right), vertically (top to bottom), or diagonally (top left to bottom right) – at least 20 words used in accounting.

D C R E D I T F A I R A D O W E N R L C N E T S E W B P U O C C V A O S B I A E W R O E B J Y E T C L C U M N F U N D T C O A E E U A N D K A O S S N U E P R O G X U S H T C V V A L U E N V I E W E L A U D I T D E F E R