ACCOUNTING AND FINANCIAL STATEMENTS

1. ACCOUNTING AND FINANCIAL STATEMENTS

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

3. Accountants may have a specific focus • Management/managerial accounting • Tax accounting • Cost accounting • Historical cost accounting • Replacement cost accounting MK:pp.95, 96, 98

4. 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?

5. Which financial statements answer the previous questions? • The Balance Sheet • The Profit and Loss Account -P&L (The Income Statement) • The Cashflow Statement

6. net profit, loss, revenues, sales, cash flow, gross profit • ………………… profit which remains after all costs, expenses and taxes have been taken away • …………………amount of money coming into and going out of a company • …………………spending more money than it is received • …………………total number of products that a company sells over a period of time • …………………money re ceived from selling goods and services • …………………profit before taking away expenses and taxes

7. Opposites? • Debit • Appreciation • Debtor • Profit • Fixed assets/liabilities • Long-term • Tangible • Accounts payable • Revenue

8. Credit Depreciation Creditor Loss Current assets/liab. Short-term Intangible Accounts receivable Expenditure Opposites?

9. 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 Opposites

10. Financial statements -revision 1 Where can the following information be found? • How much does a company owe? What does it own? • What are its sales and related costs and expenditure? • Where does cash come from? What is it spent on? • What does equity include?

11. 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?

12. 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

13. A few more terms used in accounting (MK, p.97): goodwill, share premium, common stock, pre-paid expenses, proceeds Source: Investopedia • costs such as rent, interest or insurance premium that are paid in advance • an intangible asset such as a strong brand name, good customer relations, good employee relations and any patents or proprietary technology • cash realized from a sale or received as a loan, after all commissions, expenses, fees, and taxes are deducted • 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 • 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

14. 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

15. Listening, p.98 (MK) • What intangible assets are mentioned? • Problems in valuation? • Profit? • Example? What is taken into consideration? • What is depreciation charged against?

16. Assignment: Google’s annual report http://www.sec.gov/Archives/edgar/data/1288776/000119312513028362/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)

17. 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/20121231_google_10K.pdf

18. 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

19. 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.

20. 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.

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

23. Translate the following: • Dobit nakon oporezivanja • Zalihe • Dugotrajna imovina • Dobit od redovitog poslovanja • Ukupne kratkoročne obveze • Zadržana dobit • Materijalna imovina • Prekoračenje računa • Sumnjiva i sporna potraživanja • Troškovi redovnog poslovanja • Nematerijalna imovina • Potraživanja • Amortizacija • Obračunato, a neplaćeno/nefakturirano (adj.)