1. Accounting

2. Raising capital How can businesses raise capital? Is there a difference in how incorporated and unincorporated businesses raise capital? Define assets and liabilities.

3. Read the text (RB, p. 69) and then… 1. Underline the key words in the text. 2. Find a definition for: liabilities assets working capital / funds 3. Explain the difference between buying something on credit and buying something on a loan 4. Write a sentence with owe and one with own.

4. Financial reporting and the annual report Read 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

5. The 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!

6. The 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 firm’s ______ strength. Key equation: Assets = Liabilities + Owner’s Equity

7. The 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 firm’s financial strenght. Key equation: Assets = Liabilities + Owner’s Equity

8. The equation explained Assets = Liabilities + Owner’s equity Owner’s 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).

9. Tasks 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?

10. Find English terms in the text (p. 72/VII) for these Croatian terms: odgođeni porez kratkoročne obveze dugoročne obveze obveznice obračunati, a neplaćeni rashodi vjerovnici deferred taxes current liabilities long-term liabilities bonds accrued expenses accounts payable (or creditors)

11. The 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

12. The 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

13. Read about the P&L 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 SG&A net profit depreciation amortization

14. Types 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)

15. Types of earnings: Put them in order according to size. 1. Total sales revenue (turnover, top line) 2. Gross profit 3. EBITDA (Operating profit) 4. Earnings Before Interest and Tax (EBIT) 5. Net profit (bottom line) 6. Reserves

16. The 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 firm’s l___.

17. The 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 firm’s liquidity.

18. Make 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

19. Make 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

20. Revision: the three financial statements Match up the financial statement with the term that describes its purpose 1. P&L account 2. Balance sheet 3. Cash flow statement A. liquidity B. profitability C. the company’s financial position

21. Put 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

23. Tasks MK, p. 95/1 MK, p. 95/2 MK, p. 96/3