9. Income statement

The income statement provides information for assessing a firm financial performance during a period of time. This statement indicates the net income, earnings, or net profit of the company for a period of time.

The income statement presents the results of earnings activity over time and therefore reports flows. In contrasts, the balance sheet presents a statement of the firm’s assets and equities at a specific point in time and reports stocks.

The terms net income, earnings, and net profit are synonyms used interchangeably in corporate annual reports and through this text. Generating earnings is a primary activity of most business firms, and the income statement

is intended to provide a measure of how successful a firm was in achieving this goal for a given time span. Net income is the difference between revenues and expenses for a period.

Revenues are a measure of the inflows of assets (or reductions in liabilities) from selling goods and providing services to customers.

Expenses are a measure of the outflows of assets (or increases in liabilities) used up in generating revenues. The cost of merchandise sold ( an expense) is measured by the acquisition cost of merchandise that was sold to customers. Salaries expense is the amount of cash payments or liability to make future cash payments to employees for services received in helping generate revenues during the period. Depreciation expense is a measure of the services of equipment and buildings used during a year. For each expense there is either a reduction in an asset or an increase in a liability.

I . Прочитайте та перекладіть текст.

ІІ. Визначте, які з поданих тверджень відповідають змістовi тексту. Запишіть номери цих речень.

1. The income statement shows the net profit of the company.

2. The balance sheet provides information on the results of earnings activity.

3. Generating profit is a primary activity of most business firms.

4. Net income is the difference between expenses and revenues.

5. To assess a firm’s financial performance, the income statement is used.

6. The terms “earnings”, “net profit” and “net income” are not used interchangeably.

7. The inflows of assets are measured by revenues.

ІІІ. Прочитайте наступні питання. До кожного питання пропонуються 3 варіанти відповідей. Запишіть номер питання та літеру того варіанту, який ви вважаете правильним.

1. What kind of business firms’ activity is considered to be the most important?

A. selling goods;

B. providing services;

C. generating earnings;

2. For what purpose is the income statement usually prepared?

1. to assess a firm’s financial performance;

2. to make annual report;

3. to measure assets.

3. What does the income statement show?

1. profit;

2. earnings;

3. flows.

4. That does the balance sheet present?

1. the results of canings activity;

2. a statement of the firm’s assets and equities;

3. the net income.

5. What does the income statement indicate?

1. expenses;

2. liabilities;

3. net profit.

6. What does the balance sheet report?

1. flows;

2. stocks;

3. expenses.

7. What is a measure of the cut flows of assets?

1. liability;

2. revenue;

3. expense

ІУ. Визначте слова, які відповідають змісту наступних речень:

1. The income statement helps … a firm’s financial performance.

1. to assess;

2. to provide;

3. to perform.

2. Most business firms generate …:

1. earnings;

2. expenses;

3. payments.

3. The reductions in liabilities are measured by …:

1. services;

2. revenues;

3. assets.

4. The employees receive … for their labor services:

1. wages;

2. salaries;

3. income.

5. The services of equipment and buildings are measured by … expense.

A. depreciation;

B. advertising;

C. consumption.

6. The difference between revenues and expenses for a period is…

A. gross profit;

B: taxable income;

4. net income.

7. … is a legal obligation to pay a definite amount at a definite time.

1. liability;

2. debt;

3. promise.

У. Виберіть і напишіть замість крапок форму дієслова, яка б відповідала граматичним нормам англійської мови.

1. Assets and liabilities … as current and concurrent:

1. classify;

2. have classified;

3. are classified.

2. Accounts receivable are shown at the amount of cash … from customers:

1. to expect;

2. expected;

3. expecting.

3. Assets and liabilities … on a cash basis:

1. have valued;

2. value;

3. are valued.

4. Current liabilities are liabilities … within a year:

1. to pay;

2. paying;

3. paid.

5. Retained earnings are earnings … by a first since its formation.

1. realized;

2. realizing;

3. to realize.

6. … capital reflects the assets invested by shareholders:

1. contributed;

2. contributing;

3. contribute.

7. Management … the use of a firms assets:

1. direct;

2. directs;

3. directing.

УІ. З підкреслених слів або словосполучень виберіть те, яке треба змінити, щоб речення відповідало правилам граматики англійської мови.

1. The shareholders equity generally comprise too parts.

A B C

2. Liabilities plus shareholders equity are referred to us total equities.

A B C

3. The primary activities of most business firms is generating earnings.

A B C

4. Noncurrent assets are hold and used for several years.

A B C

5. Corporations aquire merchandise inventory from there suppliers.

A B C

6. Creditors’ claims result from benefits previous received by a firm.

A B C

7. In the balance sheet the resources are view from two viewpoints.

A B C