MARCO TEÓRICO
ESCUELA DE ESPECIALIDADES
To + infinitive can be used to explain why we do something In order to + infinitive and so as to + infinitive are also us to express purpose but they are more formal than to + infinitive.
Example: - 1 went to the warehouse to get some more stock - You should book your tickets early in order to avc disappointment.
- She put the letter in her bag so as not to lose it.
Exercise 1.Complete the sentences, using the words in italii
attract, reduce, prevent, increase, demand
1. I am writing... you of our change of address.
2. It is likely that the union will go on strike... a pay rise. 3. We will have to employ more factory workers... reduction.
4. We have cut the price out of our products by 0%... more customers.
5. The government may soon raise interest rates... iflation growing.
IV. Word study
Exercise 1: Match up these words or phrases with the .efinitions below.
a- assets b- depreciation c- liabilities d- turnover e- reditors (GB) or accounts payable (US) f- debtors (GB) or iccounts receivable (US) g- overheads (GB) or overhead (US) h-
evenue or earnings or income
i- shareholders (GB) or stockholders (US) 1- stock (GB) or nventory (US)
1. a company’s owners
2. all the money received by a company during a given period 3. all the money th at a company will have to pay to someone ỉlse in the future including taxes, debts, and interest and mortgage payments
4. the amount of business done by a company over a year 5. anything owned by a business (cash investments, buildings, machines, and so on) th at can be used to produce goods or pay liabilities
6. the reduction in value of a fixed asset during the year it is in use (charged against profits)
7. sum of money owed by customers for goods or services purchased on credit
8. sum of money owed to suppliers for purchases made 0 X1 credit
9. (the value of) raw materials, work in progress, and finished products stored ready for sale.
10. The various expenses of operating a business that can not be charged to any one product, process or department
Exercise 2: Choose the best answers.
1. Financial information is regularly transferred from the journal to a book containing all the accounts. This means th at the figures are:
a. Entered in the journal b. Balanced
c. Posted in the ledger d. Considered as assets.
2. The best way to explain the difference between bookkeeping and accounting is:
a. Bookkeeping is done by a bookkeeper, but accounting must be done by an accountant.
b. Bookkeeping is the daily recording of financial information, but accounting is the design and maintenance of the bookkeeping system.
c. Bookkeeping is done in the journal, but accounting is done in the ledger.
d. Bookkeeping is more sophisticated than accounting.
3. An accountant can interpret the information found in the ledger and use it to construct financial statements. This means an accountant can.
a. Make financial decisions for the company.
183
b. Allocate capital resources.
c. Prepare a balance sheet and income - expense statement after examining the accounts.
d. Analyze book keeping procedures.
4. Management analyzes the financial statements and uses them as a basis for allocating financial resources. This means:
a. All transactions and sales of securities must be considered.
b. The statements help them decide how to invest their capital.
c. The sale of securities can help finance expansion. d. All of the above.
5. Since all the fixtures are included in the price of the building,
a. Lighting and plumbing equipment are to be removed by the seller.
b. All attach shelves and heating equipment must show a decline in value.
c. Air conditioning and other attached electrical and plumping devices will remain attached when the building is sold.
d. All of the above. V. Vocabulary
- the profit and loss account (GB) or income statem ent (US): báo cáo lỗ lãi (Anh) hoặc báo cáo thu nhập (Mỹ)
- overheads (GB) or overhead (US): the various expenses of
operating a business that can not be charged to anyone product, process, or department: tổng phí (các loại chi phí hàng ngày có liên
quan đến hoạt động của doanh nghiệp).
- liabilities: all the money that a company will have to pay to
someone else in the future including taxes, debts, and interest and mortgage payments', trách nhiệm trả nợ, nợ
- accounts receivable (US) or debtors (GB): sum of money
owed to customers for goods or services purchased on credit: khoản
phải thu
- accounts payable (US) or creditors (GB): sum of money
owed to suppliers for purchases made on credit', khoản phải trả
- negative items: the items les than zero: (khoản) mục âm / lỗ - double-entry bookkeeping: every transaction is recorded in
one account as a sum received and other as a sum paid: ghi sổ kép
- equation: statement that two mathematical expression are
equal: phương trình, công thức
- share premium (GB) or paid-in surplus (US): chênh lệch cổ phần
U n it 27
THE BALANCE SHEET
Read the following explanation o f the balance sheet. As you •ead it, fill in the headings in the left - hand column o f Chart 27.1:
The balance sheet is a statem ent of what a company owns its assets) and what it owes (its liabilities) at a particular time. It :onsists of three major sections: assets, liabilities and equity.
These three sections are arranged differently from country to ountry. In the USA and many European countries, the assets ippear on the left - hand side of the page and the liabilities on the ight. In England, the three sections mentioned above are .rranged vertically.
In the balance sheet below (Chart 27.1), the fixed assets are iroken down into intangibles (such as patents and goodwill, ntered in the books at a value of £1.5 million) and tangible assets such as freehold property, land and equipment, at a book value of
7.5 million).
The next heading is current assets and this is split into hree: firstly stocks valued at £3.2 million, then debtors (in other /ords outstanding payment for goods sold) at £1.3 million, and hirdly cash at the bank, worth £350,000. The total of current ssets is then reduced by the total of current liabilities, which in his case is £2.2 million and represents amounts owing to reditors, leaving a net figure of £2.65 million. Thus the total
ssets less the current liabilities amount to £11.65 million.
To reach the final balance this figure must be reduced by the um of long - term liabilities such as loans and also any
L R e a d in g
provisions. In this case £2.45 million is set aside for long - term loans and there is a £450,000 provision for deferred taxation. So this leaves a final balance of £8.75 million worth of net assets.
The net asset figure is represented by the final section of the balance sheet - capital and reserves. This company has a share capital of £6.5 million. This sum is topped up by a share premium account which represents the difference between the above issued share value and the actual price of the shares. In this case, the capital is further increased by £1.4 million. The company has also revalued its fixed assets to give them a more realistic market price so that the shareholders’ equity increases by a further £1.15 million and an equivalent amount is charged to depreciation in the profit and loss account. Finally, £300,000 is deducted in retained profit. Chart 27.1 BALANCE SHEET * as at 31 December 1991 1990 0 0 1.500 1.40 7.500 7,200 9,000 8,600 3,200 2,800 1,300 1,400 350 250 4 ,8 5 0 4 ,4 5 0
(2,200) (2,100) 2,650 2,350 11,650 10,950 (2,450) (2,850) (450) 8,750 8,100 6,500 6,500 1,400 1,200 * 1,150 800 (300) (400) Shareholders' funds 8,750 8,100
II. Com prehension / Interpretation
1. In many companies, intangible fixed assets do not appear in the balance sheet. In what circumstances must a company value its intangible assets?
2. Why should taxation be deferred?
3. Why is it sometimes necessary to account for the share premium?
■ III. Language focus
3.1. P repositions - am ount an d difference
Look at the following sentences taken from the Reading passage:
“This figure must be reduced by the sum of the long - term liabilities...”
“This leaves a balance of £8.75 million...”
Now complete the sentences below with the correct prepositions:
1. When current liabilities are subtracted _____ current assets, there is net balance_____ £50,000.
2. Debtors have increasedlast year’s figure of £25,000 _____ a to ta l______£48,000.
3. Our bank loan has decreased _____ 10 percent, so a balance_____ £25,000 remains.
4. The bank overdraft stood______ £18,000 last year. It has been reduced_____ £5,000 and now sta n d s____________ £13,000. 5. There has been an in crease______ 2 percent per year in interest payments. So in fact it’s rocketed _____ 6 percent in
1987_____ 12 percent this year.
3.2. Sequence
Look at the following sentence taken from the Reading passage:
“The next heading in current assets...: firstly..., then... and thirdly...”
Now pu t the following process in the right order: Setting up a joint venture
a. If no published accounts are available, then you should check on its financial standing with credit agencies.
b. Initially, s / h e may be wary of your approach.
c. In the meeting, you should identify clear objectives for both sides.
d. The first step is to identify a company in the right sector. e. Once you have a clear picture of its financial status, arrange to meet the managing director.
f. Finally, it’s important to remember that, however, good relationship, a clear legal contract is necessary to cement the deal.
g. Having done this, you need to look closely at its published accounts.
h. However, once you have made your intensions clear, you should be able to establish a good relationship.
IV. W ord stu d y
Expressing value
Item Value expression A m ount
is valued at £2 5 million
has been revalued at
Property amounts to
is worth
is set at a book value of is topped up by
Am ount Value expression
is charged to Ê 25 million is entered under
fixed assets
Item
is set aside for
Now complete these sentences:
1. The la n d ______ at $40 million. 2, $40 million______ for the land.
3. The share value was too low so i t ______ by £10 million. 4. Fixed a s s e ts ______ of £20 million. However, in reality they are at least £35 million.
5. An additional $400,000______ to depreciation. V. Vocabulary
- balance (n): amount which makes the total credits and
debits equal: số lượng cân đối giữa có và nợ (số dư)
- balance sheet (n): statement o f the financial position of a
company or business at a certain moment: bảng cân đối, bảng
quyết toán, bảng tổng kết tài sản
- asset (n): something o f value which is owned by a company: tài sản
+ current assets (n): assets in daily use by a business: tài sản lưu động
* + fixed assets (n): property and machinery', tài sản cố định + frozen assets (n): assets which can not be sold, usually
because there is a dispute: tài sản phong toả
+ intangible assets (n): assets which can not be seen (such as
goodwill, patents, etc): tài sản vô hình
+ liquid assets (n): cash or bills which can be easily converted
into cash: tài sản dễ thanh tiêu
+ tangible assets (n): assets which can be seen (such as
property, machinery, etcj: tài sản hữu hình
- asset - stripping (v): buying a company in order to sell its
assets: mua thanh lý tài sản giá rẻ (tháo dỡ tài sản)
- goodwill (n): good reputation of a business - intangible asset
- patent (n): bằng phát minh / sáng chế; quyền sỏ hữu đất. - split (v): break sth into parts; divide or share sth: chia ra thành từng phần, chia sẻ
- stock (n):kho hàng, trái phiếu, cổ phần, chứng khoán (Mỹ) - liability (n): legal obligation: trách nhiệm pháp lý
- liabilities (n): debts of a business: những khoản nợ của doanh nghiệp, công nợ
+ current liabilities (n): short - term debts-, những khoản nợ ngắn hạn, nợ không kỳ hạn
+ deferred liabilities (n): long - term debts', những khoản nợ trả chậm, nợ kỳ hạn.
- defer (v): to p ut to a later date: để chậm lại (ngày) sau
-k deferred payments (n): payments postponed to a later date: mua chịu / thanh toán sau.
+ deferred taxation (n): đánh thuế sau.
- provision (n): money set aside in accounts for later use: khoản dự trũ, dự phòng
- share (n): a small part of a company's capital', một phần nhỏ vốn của công ty (cổ phần của công ty)
- premium (n) 1. extra charge: tiền bù, tiền các (tính thêm) 2. price paid for insurance: phí bảo hiểm
- profit (n): money gained from doing bussiness: lợi nhụận - outstanding (adj): not yet paid, done, resolved, etc\ còn tồn đọng, chưa chi trả, chưa giải quyết xong.
- freehold (adj): complete ownership of property for an
unlimited period of time: quyền sở hữu
U n it 28
THE PRO FIT AND LOSS ACCOUNT
Read the following explanation o f profit and loss (P&L) accounts. As you read it, complete the statement o f accounts (Chart
28.1)
The profit and loss account, also known as the income statement, summarises the profitability of the company by balancing revenue against expenses.
Revenue (sometimes called turnover) represents any increase in the owner’s equity resulting from the operation of the business. Expenses are costs incurred in connection with the earning of revenue.
In the P&L account below (Chart 28.1), the direct costs, or cost of sales of £30 million, are deducted from the turnover of £65 million to reach a gross profit of £35 million. The operating profit is reached by deducting other operating expenses, sometimes called fixed costs (in this case £15.5 million) to reach a figure of £19.5 million as an operating profit. On some statements, especially consolidated accounts, minority interests will be deducted from this sum. In this case, £5.4 million is due to the minority shareholders in the company’s subsidiaries and associated companies.
The profit figure now reached (£14.1 million) is taxable at whatever rate of corporation tax is applicable. This company pays £1.8 million in tax to end up with £12.3 million in profit after tax. This year, an amount of £450,000 is set aside as an extraordinary item. This represents a sum contributed to a special disaster fund.
I. R e a d in g
The £11.85 million can now be distributed between shareholders and retentions to the reserves. In this case there are a small number of preference shareholders who receive a fix dividend of £50,000 in total; a further £300,000 is paid out as a dividend to the ordinary shareholders. The company retains earnings of £11.5 million. Of particular interest to investors is the earnings per share, which has risen from 25p last year to 31p this year.
Chart 28.1
CONSOLIDATED PROFIT AND LOSS ACCOUNT Year ended 31 December
1991 1990 £000 £000 65,000 (30,000) 60,000 (29,000) 35,000 31,000 (15,500) (14,800) 19,500 19,200 (5,400) (4,800) 14,100 11,400 (1,800) (1,900) 12,300 9,500 (450) 11,850 9,500 (50) (40) (300) (190) 11,500 9,280 31p 25 p
II. C om prehension / Interpretation
1. Compare this year’s with last year’s results. What are the significant changes?
2. W hat type of expenses would be included under ‘other operating expenses (fixed costs’?)
3. W hat type of cost can be included under ‘extraordinary items’?
4. What is the difference between preference and ordinary shares?
5. Why is the earnings per share interesting to the investor? III. Language focus
3.1. D efining an d non-defining rela tive clauses
Look at the following sentences taken from the Reading passage:
‘The profit and loss account, also known as the inc’ome statement, summarises the profitability...’
‘In this case there are a small number of preference shareholders who receive a fixed dividend of £50,000 in total...’
Now complete the following sentences:
1. The profit and loss statem ent make depressing reading. You received it yesterday.
2. The bookkeeper made some terrible mistakes. We hired him last year.
3. The accounts were audited two months late. You will find the accounts attached.
4. The production manager underestimated the operating
We fired the production manager two days ago.
5. Profits have still not been distributed to the employees. Profits were well down on last year.
3.2. Passive versus active voice
Look at the following sentences taken from the Reading passage:
‘The direct costs... are deducted from the turnover...’ ‘This company pays £1.8 million in tax...’
Now change the following sentences from active to passive voice or vice versa:
1. The profit and loss account summarises the profitability of the company.
2* This company pays £1.8 million in tax.
3. The preference shareholders received a fixed dividend of £50,000.
4. Earnings of £11.5 million are retained by the company. 5. The accountants calculate the taxable profit.
6. Considerable costs have been incurred by investing in property.
7. We will maximise our profits by deferring taxation.
8. Savings would have been made by reducing production capacity.
IV. Word study
With some words, many forms can be generated. For example: to profit a profit profitability profitable (to make aprofit)
Generate other forms (where indicated) of the following verbs:
Verb Noun Adjective
to operate ______________ _____________ to deduct ______________ _____________ to tax ______________ _____________ to apply ______________ _____________ to contoibute ______________ _____________ to retain ______________ _____________ to distoibute _____________ _____________ V. Vocabulary
- turnover (n): total amount of sales: Doanh thu
e.g: Our turnover in 2006 was 25 percent upon 2005.
- incur (v): to be liable, to have to pay: Gánh chịu
e.g: incur debts: mắc Ĩ1Ợ
- P&L account: profit and loss account', báo cáo thu chi - deduct (v): to subtract from the total figure'. khấu trừ
e.g: after deducting all the costs, we actually made a loss
- consolidate (v): to put the accounts o f subsidiary companies into the parent's accounts: kết hợp, liên kết
e.g: Consolidated accounts: tài khoản hợp nhất
- subsidiary (n): công ty nhánh, công ty con
- subsidise (v): to help or support financially, trợ giúp, trợ cấp
e.g: the government subsidises new investment in depressed areas.
- subsidy (n): money given to support unprofitable enterprises:
tiền trợ cấp
- retention (n): giữ lại, tích lại - retain (v)
- retained earinings / profits: undistributed earnings / profits - operating profit (n): profits from normal trading o f a
company: lợi nhuận kinh doanh
- account (n): a record o f financial transactions accounts (n): the financial records of a business.
e.g: The bank would like to see the accounts- profit and loss
account (n): accounts showing income and expenditure (u .s :
income statement): báo cáo thu chi
- earnings per share (EPS): dividends per share shown as a
percentage o f the market value o f a share: Tiền lòi theo đầu cổ
phiếu
U nit 29
AUDITING