Tiếng anh chuyên ngành kế toán bài 3
Trang 1FINANCIAL STATEMENTS
UNIT OBJECTIVES - MỤC TIÊU
DURATION (9 periods) - THỜI LƯỢNG HỌC (9 TIẾT)
• Provide students with the language and knowledge related to main types of financial statements
Cung cấp cho sinh viên vốn ngôn ngữ và kiến thức liên quan đến các loại báo cáo tài chính
cơ bản
• Provide students with the language of describing a graph
Cung cấp cho sinh viên ngôn ngữ dùng để mô tả biểu đồ
• At the end of this unit, students will be able to tell and write about main types of financial statements, the main characters of each type and the importance of studying them
Sau khi kết thúc bài học này, sinh viên có thể nói và viết về các loại báo cáo tài chính cơ bản, những đặc điểm của từng loại và tầm quan trọng của việc nghiên cứu các báo cáo tài chính
In this unit, we will learn the language and knowledge related to main types of financial statements and their main characteristics
Trong bài học này chúng ta sẽ học về những kiến thức ngôn ngữ và kế toán liên quan đến các loại báo cáo tài chính cơ bản và các đặc điểm chính của từng loại báo cáo tài chính
Trang 2Match the words or expressions in column A with their definitions in column B The suggested time to do this exercise is 10 minutes.
1 Profit and loss account A A description of the ways a new business hopes
to make money, showing possible income and expenditure
2 Balance sheet B Financial statement which shows a company’s
financial condition (amount of debits and credits) on the last day of an accounting period
3 Share certificate C The net profit or net income line on a profit and loss
account or income statement
4 Capital expenditure D Items of value which are not easily changed into
cash but which the business needs
5 Bottom line E Cash and other liquid assets in excess of current
liabilities; the ease with which an asset can be spent
or sold
6 Business plan F Financial statement which shows the profit or loss
made by a company during the accounting period
7 Liquidity G A document which represents a part of the total stock
value of a company and which shows who owns it
8 Dividend H A share in the annual profits of a limited company,
paid to shareholders
9 Fixed assets I Those whose value can only be quantified or turned
into cash with difficulty (e.g copyrights, trade marks)
10 Intangible assets J Major spending on large items necessary for the
business, such as property or equipment
Trang 3Text A: Read text A below and do exercise 2.1 The suggested time for reading the text and completing the exercise is 30 minutes
FINANCIAL STATEMENTS
Financial statements
If you can read a nutrition
label or a baseball box
score, you can learn to read
basic financial statements If
you can follow a recipe or
apply for a loan, you can learn
basic accounting The basics
aren’t difficult and they aren’t
science
There are four main financial
statements They are: (1) balance
sheets; (2) income statements;
(3) cash flow statements; and
(4) statements of shareholders’
equity Balance sheets show
what a company owns and
what it owes at a fixed point in
time Income statements show
how much money a company
made and spent over a period
of time Cash flow statements
show the exchange of money
between a company and the
outside world also over a
period of time The fourth
financial statement, called
a “statement of shareholders’
equity,” shows changes in the
interests of the company’s
shareholders over time
The followings will look into details of the first three financial statements
Balance Sheets
Abalance sheet provides
detailed information about
a company’s assets, liabilities and shareholders’ equity
Assets are things that a com-pany owns that have value
This typically means they can either be sold or used by the company to make products or provide services that can be sold Assets include physical property, such as plants, trucks, equipment and inventory It also includes things that can’t
be touched but nevertheless exist and have value, such as trademarks and patents And cash itself is an asset So are investments a company makes
Liabilities are amounts of money that a company owes to others This can include all kinds of obligations, like money borrowed from a bank
to launch a new product, rent for use of a building, money owed to suppliers for materials, payroll a company owes to its employees, environmental cleanup costs, or taxes owed to the government Liabilities also include obligations to provide goods or services to customers
in the future
Shareholders’ equity is some-times called capital or net worth It’s the money that would be left if a company sold all of its assets and paid off all
of its liabilities
This leftover money belongs to the shareholders, or the owners,
of the company
A company’s balance sheet is set up like the basic accounting equation On the left side of the balance sheet, companies list their assets On the right side, they list their liabilities and shareholders’ equity Some-times balance sheets show assets at the top, followed by liabilities, with shareholders’ equity at the bottom
A balance sheet shows a snap-shot of a company’s assets, liabilities and shareholders’ equity at the end of the report-ing period It does not show the flows into and out of the accounts during the period
Trang 4Income Statements
An income statement is a
report that shows how
much revenue a company
earned over a specific time
period (usually for a year or
some portion of a year)
An income statement also
shows the costs and expenses
associated with earning that
revenue The literal “bottom
line” of the statement usually
shows the company’s net
earnings or losses This tells
you how much the company
earned or lost over the period
Income statements also report
earnings per share (or “EPS”)
This calculation tells you how
much money shareholders
would receive if the company
decided to distribute all of the
net earnings for the period
(Companies almost never
dis-tribute all of their earnings
Usually they reinvest them in
the business.)
To understand how income
statements are set up, think of
them as a set of stairs You start
at the top with the total amount
of sales made during the
accounting period Then you
go down, one step at a time
At each step, you make a
deduction for certain costs
or other operating expenses associated with earning the revenue At the bottom of the stairs, after deducting all of the expenses, you learn how much the company actually earned or lost during the accounting period People often call this
“the bottom line.”
Cash Flow Statements
Cash flow statements report
a company’s inflows and outflows of cash This is im-portant because a company needs to have enough cash on hand to pay its expenses and purchase assets While an in-come statement can tell you whether a company made a profit, a cash flow statement can tell you whether the com-pany generated cash
A cash flow statement shows changes over time rather than absolute dollar amounts at a point in time It uses and re-orders the information from a company’s balance sheet and income statement
The bottom line of the cash flow statement shows the net increase or decrease in cash for the period Generally, cash flow statements are divided into three main parts Each part
reviews the cash flow from one
of three types of activities: (1) operating activities analyzes a company’s cash flow from net income or losses; (2) investing activities shows the cash flow from all investing activities, which generally include pur-chases or sales of long-term assets; and (3) financing activ-ities statement shows the cash flow from all financing activities
Although this article discusses each financial statement sepa-rately, keep in mind that they are all related The changes in assets and liabilities that you see on the balance sheet are also reflected in the revenues and expenses that you see on the income statement, which result in the company’s gains or losses Cash flows provide more information about cash assets listed on a balance sheet and are related, but not equivalent, to net income shown
on the income statement And
so on No financial statement tells the complete story But combined, they provide very powerful information for investors And information is the investor’s best tool when it comes to investing wisely
Source: Text A: From Beginners' Guide to Financial Statements, US Securities and Exchange Commission, http://www.sec.gov/investor/pubs/begfinstmtguide.htm
Trang 5According to text A, which of the following sentences are true (T) or false (F)
In which kind of financial statements can you find the information about the followings? Put them in the correct box
Below you will find answers to five different questions Read the text again and try to supply the missing questions
Example: What are the four main financial statements?
They are balance sheets, income statements, cash flow statements, and statements of shareholders’ equity.
1 ………?
They can either sell or use them to make products or provide services for profit
2.1
2.2
2.3
Questions T/F
1 Financial statements show financial information of a company from the
establishment to the present
2 Assets includes visible and invisible valuable things that a company owns
3 Liabilities are amount of money that a company owns from others
4 A balance sheet gives an overview of accounting equation
5 Looking at the income statement, investors can estimate how much money
they might receive
6 The income statements are set up from the bottom to the top
7 A cash flow statement shows how the company generates cash
8 A cash flow statement is set up separately from the balance sheet and the
income statement
9 A cash flow statement often analyzes the cash flow from three angles
10 The financial statement, balance sheet and cash flow statement have no
relationship with each other
Trang 62 ………?
Trademarks are intangible assets
3 ………?
It shows information about a company’s assets, liabilities and shareholders’ equity at the end of the reporting period
4 ………?
The “bottom line”
5 ………?
To know whether it has enough cash on hand to pay its expenses and purchase asset
Text B: Read text B and do exercices 2.4 and 2.5 below The suggested time for reading the text and completing the exercise is 30 minutes
THE INS AND OUTS OF CASH FLOW STATEMENTS
Understanding your cash flow statement is key to tracking your business's financial health
Cash is what keeps your business functioning You obviously
need profit, but equally as critical is your cash flow
It's important to know the financial health of your
business, which is why you need to understand the
purposes of your different financial statements Your
traditional financial statements include a balance sheet,
profit and loss statement, and cash flow statement What
does the cash flow statement tell you that the others don't?
There's a difference between profitability and cash flow You may be profitable and still have
a negative cash flow, which is a difficult concept to understand for most business owners Why? There are things that take cash out of the business that don't classify as expenses and therefore don't appear on your profit and loss statement These include:
• Payment of loan principal • Payment of credit card principal • Owner's draws These transactions take cash out of the business and therefore show up on your cash flow statement, but not on your profit and loss statement When you borrow money from a lender
or credit card vendor, you don't count it as income Therefore, when you pay it back, you don't count it as an expense The interest or finance charges you incur on borrowing that money are an expense and will appear as an expense and use of cash Similarly, when you invest money in your own business as an owner's investment, it's not counted as income
So when you take money out as an owner's draw, it doesn't count as an expense Owner's transactions affect your equity, not your revenue or expense accounts
When looking at a cash flow statement, you have three main breakdowns that show where cash is coming from and going to:
Trang 7Operating activities include your day-to-day operations.
Increases and decreases in receivables and payables are
accounted for on your cash flow statement, as are other
activities from operating your business and selling your
products and services The operating section is where your
main cash flow should be generated Long-term business
health comes from having a good net profit and positive
cash flow from your operating activities
Investing activities include the purchase and sale of your
long-term fixed assets, such as property, plant and equipment
Financing activities include the borrowing and repayment of long-term liabilities
Understanding what your cash flow statement is telling you about your business is critical All three of your main financial statements - balance sheet, profit and loss statement, and cash flow statement - relay a different view of your business, and each is critical to the overall health of your business
Source: From The Ins and Outs of Cash Flow Statements, By Pam Newman, May 15, 2007 http://entrepreneur.com
Match the column A with column B to make meaningful statements
Fill in the blanks with the following words
assets and debts business plans expenses in the middle
movement on the left on the right
Financial statements are _(1) _ that provide an indication of an individual’s, organization’s, or business’ financial status There are three basic types of financial statements: balance sheet, income statement, and cash-flow statement Typically, financial statements are used in relation to business endeavors
Balance sheet are used to provide insight into a company’s (2) at a particular point in time Information about the company’s shareholder equity is included as well Typically, a company lists its assets (3) side of the balance sheet and its debts
2.4
2.5
1 Although investors are making profit A but they are not classified as
expenses
2 There are some transactions that take cash
out of the business,
B nor is it counted as expense when paid back
3 Money borrowed from a lender is not
considered income,
C and each is important to the overall health of the business
4 Interest paid for loans is counted as
expense,
D they may still have a negative cash flow
5 All the three main financial statements
give different angles of the business,
E and it will appear as an expense and use of cash
Trang 8and liabilities (4) Sometimes, however, a balance sheet has assets listed at the top, debts _(5) _, and shareholders’ equity at the bottom
Income statement present information concerning the (6) earned by a company
in a specified time period Income statements also show the company’s (7) in attaining the income and shareholder earnings per share At the bottom of the income statement, a total of the amount earned or lost is included Often, income statements provide
a record of revenue over a year’s time
Cash-flow statements provide a look at the _(8) _ of cash in and out of a com-pany These financial statements include information from operating, investing, and financing activities The cash-flow statement can be important in determining _(9) _
a company has enough cash to pay its bills, handle expenses, and acquire assets At the bottom of a cash-flow statement, the net cash increase or decrease can be found
The average individual does not typically have a use for financial statements However, sole proprietors may use them in the same manner as other businesses High-net-worth individuals may also use them for obtaining loans, participating in investment deals, and de-veloping financial, tax, and (10) In some cases, personal financial statements may
be used when running for a government office
Listening 1
Listen to a lecture about the Financial statements TWICE and decide if the statements below are TRUE (T) or FALSE (F)
Listening 2
Listen to a lecture ONCE again and fill ONE word into each blank below
Now, let’s move on to the income statement Income statement present (1) _ concerning the (2) _ earned by a company in a (3) _ time period Income statement also show the company’s (4) _ in attaining the income and shareholder (5) _ per share At the bottom of the income statement, a total of
3.1
3.2
1 The users of financial statements are quite various
2 In order to use financial statements, users must know everything about
accounting
3 Financial statements are classified into four main types
4 The balance sheet shows assets and liabilities of a company
5 In a typical balance sheet, assets are listed on the right, and liabilities on
the left
Trang 9the amount (6) _ or lost is included Often, income statements provide a record of revenue over a year’s time
Ok, right And next is the cash flow statement Cash-flow statement provide the (7) _ of cash in and out of a company These financial statements include information from (8) _, investing, and financing activities The cash-flow statement can be important in determining whether or not a company has enough cash to pay its bills, handle (9) _, and acquire assets At the (10) _ of a cash-flow statement, the net
cash increase or decrease can be found
And finally, I will give you the overview of the last basic type of financial statement Shareholders’ equity show (11) _ in a company's or organization’s retained earnings over a specific period of time These statements show the beginning and final balance of retained earnings,
as well as any adjustments to the (12) _ that occur during the reporting period This information is sometimes included as part of the balance sheet, or it may be (13) _ with an income statement However, it is frequently provided as a completely separate statement The average individual does not typically have a use for financial statements However, sole proprietors may use them in the same manner as other businesses High-net-worth individuals may also use them for the purpose of obtaining loans, participating in (14) _ deals, and developing financial, tax, and business plans In some cases, personal financial statements may be used when running for a (15) office
Select the correct choice to complete each sentence The suggested time for completing the exercise is 5 minutes
1 The income received by someone who lends money is called _
2 Last year we issued bonus shares and $2 million
3 Assets are what you _, liabilities are what you _
4 A preference share receives a dividend _ the other classes of share
5 ESP is a company’s distributable profit divided by the number of _
4.1
Trang 104.2 Fill in each gap with ONE word from the word list below The suggested time for
doing this exercise is 5 minutes
balance sheet earning per share payroll cash flow statement profit and loss account accounting period business plan dividend
1 A shows a company’s financial condition at the end of an accounting period
2 You can know how much the profit or loss of a company during a given period by looking
at the
3 A reports a company’s inflows and outflows of cash
4 The is caculated by dividing a company’s distributable profit by the num-ber of shares
5 The payments to a company’s employees are listed in a
6 The period of time reflected in financial statements, usually either the calendar year or a quarter is called an
7 Before setting up a company, the entrepreneur is expected to make a which shows the company’s possible income and expenditure
8 All shareholders look forward to a high as a return of their investment in shares
Based on the information in the two texts above, answer the following questions with your own words
1 What does a balance sheet provide?
…… …………
2 What does an income statement show?
…… …………
3 What are reported in a cash flow statement? Why?
…… …………
4 How do the financial statements relate to each other?
…… …………
Case study
Foward Investments (FI) has headquarter in Singapore
It is run by a group of rich people who invest money in
companies It is willing to take risks by buying shares
of start-up or small companies, but also puts money into
larger companies which have good prospects for growth
5.1
5.1
