Business vocabulary related to ACCOUNTING

Universidad de Santiago de Chile

Facultad de Humanidades

Lic. en educacin en ingls

Introduction to ESP

Business vocabulary related to ACCOUNTING

Balance SheetIts a summary of a companys financial position at a specific point in time, usually the end of its financial year. It indicates the value of everything the company owes (or its assets) as well as everything that it owes (or its liabilities).As an example: Our balance sheet is not as strong as last year, since weve taken some heavy losses on investments.

AssetIts anything owned by a company that can be used to generate money or an income. It can be tangible, meaning that it has a physical existence, as can be cash, or any equipment and property; or can also be intangible, meaning that it doesnt have a physical existence, as can be a patent or copyright.

For example: Most oh the companys assets consists of accounts receivables from very risky customers and, until theyre paid, its hard to be sure of their actual value.

Consulting firms usually have few tangible assets, and their main intangible asset is the reputation theyve established.

Liability

Is a financial obligation or debt held by a company, normally liabilities can be accounts payable, bank loans and outstanding taxes.For example: Managing liabilities effectively is critical to good financial planning.

There are two types of liability: Short-term liabilities, and long-term liabilities.

Short-term liabilities are the ones paid within one year, while long-term ones are repayable after more than a year.

For example: Our short-term liabilities have grown very quickly this year, as we expanded into new territories.

Profit

It is the amount of money earned in a given period, normally a year, after deducting all its expenses.

As an example: Profits for many firms have declined due to a slowdown in consumer spending.

Profit Margin

It is the percentage of income a company retains after all costs are deducted. If the cost of a product is as high as its selling price, then the profit margin would be very low.

Example: The profit margin on luxury automobiles is much higher than on economy vehicles.

Loss

It is like a profit but in negative terms, companies make a loss (or take a loss) if a single transaction costs more than it earns.Example: Weve always taken a loss on our equipment sales, but we make it up by generating revenue through after-sales service.

Companies run at a loss if their profit is negative for an entire year.

Example: Companies that run at a loss for several years may be forced to stop trading on the Stock Exchange.

Profit/Loss Statement

Its a type of accounting report that companies publish on a regular basis.

Debt

It is money owed by a company to another company or an individual. Most corporate debt is in the form of loans from banks, or bonds that have been sold to investors.

Example: This years balance sheet shows that the companys bank debts have been fully repaid.

Gross

A gross figure is a sum that does not include any deductions. We describe the total amount of money earned by selling a companys products as gross income, or revenue.

Example: The Companys gross sales have risen 20% in the last quarter alone.To gross could be a verb as well, meaning to earn gross income.

Example: The film was a great success, and grossed more than $50 million on its first weekend.

Net

A net figure is a sum that includes all deductions. We describe the amount of money earned through a companys sales after subtracting all costs as net income, or profit.

Example: We netted more than $100000 from a single day of direct-marketing sales.

To net is also a verb, which means to earn net income.

Pretax

It is an adjective which means before payment of tax. Accountants normally show pretax profit or pretax income on one line of a companys financial statement, and show profit after tax on a separate line.

Example: Our overseas results look better on a pretax basis, because we operate in several countries where corporate taxes are very high.