ACCOUNTING AND FINANCIAL STATEMENTS

Accountancy accountants

Accounts Department, the Accounting Department Chief Accountant, Accounts Department Manager

bookkeeping - bookkeeperaccounting - accountantauditing - auditor

MK, p.95

Financial statements (1)

The Balance Sheet The Profit and Loss Account -P&L

(The Income Statement) The Cashflow Statement

RB (find Croatian equivalents)MK, p.96

profit, net profit, loss, revenues, sales, cash flow, gross profit

1. ………………… profit which remains after all costs 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 received4. …………………total number of products that a company

sells over a period of time5. …………………money received from selling goods and

services6. …………………money gained by selling something after

taking away costs7. …………………profit before taking away costs and taxes

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

Opposites Debit Appreciation Debtor Profit Fixed assets/liabilities Assets Long-term Tangible Accounts payable

Credit Depreciation Creditor Loss Current assets/liab. Liabilities Short-term Intangible Accounts receivable

Financial statements (2)

P&L (IS): What does it show?What does revenue include?What do expenditures include?What happens with profits?

BS: 3 main pieces of information?

CS: What does it show?

Financial statements (3)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. What are company profits generally used

for?4. Where does cash come from? What is it

spent on?5. What does equity include?

A few more terms used in accounting: 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

CreditorsStatement of Financial Position

Additional Paid-In CapitalIncome Statement

Net Income Profit AMS (ASM)

Ordinary SharesDebtors

Share Premium Accounts Payable

Google

Annual Report for 2011

Google 2011Study the annual report of Google and find answers to

the questions below:http://www.sec.gov/Archives/edgar/data/1288776/000119312512025336/d260164d10k.htm

a) What does SEC stand for?b) Who audited the report?c) What financial statements does the

report contain?d) What risk factors are mentioned? 

Risk Factors

Assignment1. Read the Risk Factors section in Google’s

Annual Report for 20112. Make a chart based on Slide 17, and fill in

the risk factors as appropriate (for each risk factor use its number, see slides 14-16). Some risk factors can be used in more categories.

Source: http://www.sec.gov/Archives/edgar/data/1288776/000119312512025336/d260164d10k.htm#toc260

Risk Factors (1)1. Intense competition2. Risky investments 3. Revenues generated almost entirely

from advertising 4. Decline in revenue growth5. Increased regulatory scrutiny 6. Legal proceedings 7. Dependence on a strong brand8. Acquisitions and investments 9. U.S. and foreign laws

Risk Factors (2)10.Intellectual property or other claims 11.Lack of protection of own intellectual

property rights 12.Legal liability (online services or content) 13.Diverse access to the internet (not only

PCs)14. Privacy concerns 15.Insufficient security measures 16.Web spam and content farms 17.Interruption or failure of own ICT systems

Risk Factors (3)18.Lack of effective management of the

company’s growth19.International operations 20.Losing the services of Larry, Sergey,

Eric, or other key personnel 21.Relying on highly skilled personnel22. Depending on access to the internet 23.New technologies could block ads 24.Class A common stock price may be

volatile. 25.Concentration of our stock ownership

Where could problems come from?

Report writing task• Write a report on Google’s total assets in

the period between 2007 and 2011. Use the information published on the Securities and Exchange Commission pages (www.sec.gov/Archives/edgar/data) and in the course book (MacKenzie, I. (2010): English for Business Studies. Cambridge University Press)

http://www.sec.gov/Archives/edgar/data/1288776/000119312512025336/d260164d10k.htm#toc260 (www.sec.

Check your work

Layout: obligatory sections, graphic organization (e.g. Findings), name/date

Referencing the sources (Procedure) General features of each section:

content, clarity, concision, accuracy Language: phrases, voc.,

spelling/grammar

Risk Factors (1)1. Intense competition2. Risky investments 3. Revenues generated almost entirely

from advertising 4. Decline in revenue growth5. Increased regulatory scrutiny 6. Legal proceedings 7. Dependence on a strong brand8. Acquisitions and investments 9. U.S. and foreign laws

Risk Factors (2)10.Intellectual property or other claims 11.Lack of protection of own intellectual

property rights 12.Legal liability (online services or content) 13.Diverse access to the internet (not only

PCs)14. Privacy concerns 15.Insufficient security measures 16.Web spam and content farms 17.Interruption or failure of own ICT systems

Risk Factors (3)18.Lack of effective management of the

company’s growth19.International operations 20.Losing the services of Larry, Sergey,

Eric, or other key personnel 21.Relying on highly skilled personnel22. Depending on access to the internet 23.New technologies could block ads 24.Class A common stock price may be

volatile. 25.Concentration of our stock ownership