1.1.Lookat thetext abovetofindtheanswerstothecrossword:
Across
1 and 2 down What the British call the income statement. (6, 3, 4, 7)
5 What accounts have to follow. (8) 6 Not occurring regularly. (11)
7 When companies announce results they………… them. (6)
11 The final figure for profit or loss. (6, 4)
13 Another name for ‘standard’. (4)
19 and 16, 18, 14 down What ac-counts should give. (4, 3, 4, 4)
20 When things are made to look bet-ter than they really are. (6, 8)
21 Known as accounting in the US. (11)
Down
2 See 1 across.
3 See 12 down.
4 Before tax is taken away. (3–3) 8 You find this in an annual re-port. (6)
9 Not a profit. (4)
10 Accounting that presents things in a positive light. (8)
12, 3 down What Americans call the profit and loss account. (6, 9) 14, 16,18 See 19 across
17 Noun and verb related to ‘au-ditor’. (5)
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1.2. Read the text and remember the basic definitions:
Accounting is systematic development and analysis of in-formation about the economic affairs of an organization.
The actual recording and summarizing of financial transac-tions is known as bookkeeping. When the data thus produced are abstracted in reports (usually quarterly or annually) for the use of persons outside the organization, the process is called financial ac-counting. Three reports are typically generated in financial account-ing: the balance sheet, which summarizes the firm’s assets and lia-bilities; the income statement, which reports the firm’s gross pro-ceeds, expenses, and profit and loss; and the statement of cash flow, which analyses the flow of cash into and out of the company. The creation of reports (usually monthly) for internal managerial use is called managerial accounting. Its aim is to provide managers with reliable information on the costs of operations and on standards with which those costs can be compared, to assist them in budget-ing.
The profession is called accountancy (BrE) or accounting (AmE). The activity is called accounting (BrE and AmE).
1.3. Answer the questions.
a) What’s the difference between accounting and bookkeep-ing?
b) How often are usually financial reports produced? c) What reports are generated in financial accounting? d) What is managerial accounting and what is its aim? e) How is the profession and activity called?
2. MEASURING PERFORMANCE
Text 2
The chief finance officer of a large international media company is talking to new trainees in the finance department. Remember the vocabulary in bold type:
a) Financial reporting
‘As with all companies, investors and analysts want to know how the company is being run and how their money is being used. Each year we produce an annual report with three key sets of fig-ures:
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* profit and loss account * balance sheet * cash flow statement
These are three key financial statements in financial re-porting. They give the basic information about our financial re-sults.’
b) The financial year
‘Our financial year ends on March 31st, although other com-panies choose other dates’.
Note: US companies publish their results every quarter. c) Shareholders, bondholders and lenders
‘We use shareholders’ money to operate and invest in the business. Some of the profit we make is paid out to them, usually in the form of dividends in relation to the number of shares that they each hold. Our shares are traded on the London stock market.
We also borrow money in the form of bonds. We pay per-centage interest on those bonds and then later repay the principal, the amount of money originally lent to us. Our bonds are traded on bond markets.
And we borrow money from banks in the form of loans, on which we also pay interest. Of course, our shareholders, bond-holders and lenders all take a keen interest in our accounts!
The results we publish can affect share prices: good results cause prices to rise, if the market believes the company is under-valued. However, poor results often cause a drop in share price, as investors feel the company is overvalued’.
Note: * BrE shareholder; AmE shareholder / stockholder.
2.1. Complete the table with the words from the previous text and related forms. Put a stress mark in front of the stressed syllable in each word of more than one syllable. The first one has been done for you:
Verb
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Noun-thing
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Noun-person / organization
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’borrow
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borrowing
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’borrower
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Finance
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Lend
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