Title: Accounting
1Accounting
2Raising capital
- How can businesses raise capital?
- Is there a difference in how incorporated and
unincorporated businesses raise capital? - Define assets and liabilities.
3Read the text (RB, p. 69) and then
- Underline the key words in the text.
- Find a definition for
- liabilities
- assets
- working capital / funds
- Explain the difference between
- buying something on credit and
- buying something on a loan
- Write a sentence with owe and one with own.
4Financial reporting and the annual reportRead
the text (p. 70) and find words for these terms
- making payments
- receiving money
- the place where financial transactions are
recorded - a book of accounts
- people who owe money to your company
- people to whom your company owes money
- expenditure
- income
- an account
- a ledger
- debtors
- creditors
5The balance sheet
- What are the two parts of the balance sheet?
- Explain what each part consists of.
- Why are debtors assets and creditors liabilities?
- Draw up the key formula/ equation for the balance
sheet. - Why is it called a balance sheet?
- The left and right sides must be equal, i.e,
balance!
6The balance sheet
- Shows
- what a company o___ and what it o___ on a
particular ____ (usually the last day of its
financial year). - Purpose
- a snapshot of the firms ______ strength.
- Key equation
- Assets Liabilities Owners Equity
7The balance sheet
- Shows
- what a company owes and what it owns on a
particular date (usually the last day of its
financial year). - Purpose
- a snapshot of the firms financial strenght.
- Key equation
- Assets Liabilities Owners Equity
8The equation explained
- Assets Liabilities Owners equity
- Owners equity can also be called the capital of
the company. - The equation shows how assets were financed
either by borrowing money (liability) or by using
the owner's money (owner's equity).
9Tasks
- Read RB, p. 72/VI
- What types of assets are mentioned in the text?
Define them. - Explain the difference between the listed
categories. - Why are intangible assets not included in the
balance sheet? - Read RB, p 72/VII
- What are the two types of liabilities called?
10Find English terms in the text (p. 72/VII) for
these Croatian terms
- odgodeni porez
- kratkorocne obveze
- dugorocne obveze
- obveznice
- obracunati, a neplaceni rashodi
- vjerovnici
- deferred taxes
- current liabilities
- long-term liabilities
- bonds
- accrued expenses
- accounts payable (or creditors)
11The P L account
- Shows
- profit e____ and losses m____ over a p____ of
time. - Purpose
- Calculate p_____, summarise the p_____of the
company. - Key equation
- Profit Revenue Costs
12The P L account
- Shows
- profit earned and losses made over a period of
time. - Purpose
- Calculates profits, summarises the profitability
of the company. - Key equation
- Profit Revenue Costs
13Read about the PL account and find the terms for
these definitions
- The total amount of money received during a
specific period. - The costs associated with making the products
that have been sold. - Sales revenue COGS
- Operating expenses
- The bottom line
- The decreasing the value of a tangible asset in
an account due to age, use, wear and tear. - Intangible assets with limited life have to be
written off over the period they were purchased
for.
- turnover
- COGS
- gross profit
- SGA
- net profit
- depreciation
- amortization
14Types of earnings Put them in order according
to size.
- Net profit
- Earnings Before Interest and Tax (EBIT)
- Reserves
- EBITDA (Operating profit)
- Gross profit
- Total sales revenue (turnover, top line)
15Types of earnings Put them in order according
to size.
- Total sales revenue (turnover, top line)
- Gross profit
- EBITDA (Operating profit)
- Earnings Before Interest and Tax (EBIT)
- Net profit (bottom line)
- Reserves
16The cash flow statement
- Shows
- cash i____ (s___ of funds) and cash o___ (a___
of funds) divided into 3 types of activities - o_____, f______, i______
- Purpose
- indicator of the firms l___.
17The cash flow statement
- Shows
- cash inflows ( sources of funds) and cash
outflows ( applications of funds) divided into 3
types of activities - Operating, financing, investing
- Purpose
- indicator of the firms liquidity.
18Make two groups out of the following terms
- Sources of funds, taxes, running expenses, sale
of assets, trading profits, trading losses,
applications of funds, interest payments,
purchases of assets, cash inflows, borrowed
funds, cash outflows, funds from issuing of
shares, repayment of loans, dividends
19Make two groups out of the following terms
- Sources of funds- cash inflows
- funds from issuing of shares,
- trading profits,
- borrowed funds
- sale of assets
- Applications of funds cash outflows
- purchases of assets
- running expenses
- trading losses
- interest payments,
- repayment of loans
- taxes
- dividends
20Revision the three financial statementsMatch up
the financial statement with the term that
describes its purpose
- PL account
- Balance sheet
- Cash flow statement
- liquidity
- profitability
- the companys financial position
21Put the following terms into 3 groups based on
the financial statement they describe
- Profit earned, operations, point in time, period
of time, cash inflow, assets, sources of funds,
profit, liabilities, owners equity, cash
outflow, creditors, revenue, financing, turnover,
applications of funds, losses made, debtors,
cost, owe, liquidity, own, cash deficit,
financial position of the company, cash surplus,
profitability, investing
22/
- PROFIT AND LOSS ACCOUNT
- Period of time, profitability,
- profit earned losses made, turnover
- Profit Revenue Costs
- BALANCE SHEET
- Point in time, financial position of the company
- creditors - debtors, owe - own,
- Assets liabilities owners equity
- CASH FLOW STATEMENT
- Period of time, liquidity
- cash inflow cash outflow, sources of funds
applications of funds - Cash deficit cash surplus
- Operating, financing, investing activities
23Tasks
- MK, p. 95/1
- MK, p. 95/2
- MK, p. 96/3