financial reports
Financial Reports
Vocabulary
| public | own | require |
| law | issue (2) | required by law |
| invest | government | agency |
| official | trade | trade union |
| prepare | provide | summary |
| condition | quarter | standard |
| similar | compare | important |
| include | balance | sheet |
| balance sheet | income | income statement |
| change (2) | position | asset |
| liability | net (2) | net worth |
| revenue | expense | during |
| period (2) | bottom | line |
| bottom line (2) | show (2) | whether |
| weather | profit | loss |
| gain | source | fund |
| spend/spent | organization | seek |
| organize | organized | cost |
| benefit | prospective | donor |
| wish (2) | charity | previous |
| donation |
Financial reports
Publicly owned companies are required by law to issue financial reports. These reports are used by investors, officials of banks, government agencies, trade unions, journalists, economists and others interested in a firm or its industry.
Accounting
Accountants prepare the reports, which provide summaries of a company’s financial condition. Most companies issue quarterly reports. All firms use standardized or similar accounting procedures so that the reports can be compared.
Parts of a Financial Report
The most important financial reports include balance sheets, income statements, and statements of changes in financial position. A balance sheet shows a company’s assets, liabilities, and net worth.
An income statement is a report of a firm’s revenue and expenses during a certain period.
The Bottom Line
The bottom line of an income statement shows whether the company had a net profit or a net loss for that period.
A statement of changes in financial position tells the amount and sources of incoming funds and how funds were spent during a period.
Non-commercial Enterprises
Organizations that do not seek a profit need many of the same kinds of financial reports.
For example, schools must keep track of their assets and liabilities. A government agency may wish to compare the cost of a programme with the benefits. Prospective donors to a charity may like to see how previous donations were used.
Questions
1. Financial reports are mandatory for all companies. Yes or no?
2. Who uses or are interested in financial reports?
3. Are financial reports issued annually?
4. Financial reports follow a standard format. True or false? If true, why?
5. What information is included in financial reports?
6. What is an income statement?
7. What is the most important part of a financial statement?
8. Only commercial enterprises need financial reports. Is this correct or wrong?
9. Why are the following groups interested in a company’s financial report?
a) CEOs
b) board of directors or board member
c) investors
d) officials of banks
e) government agencies (which ones?)
f) trade unions
g) journalists
h) economists
10. Do you create or look at financial reports? Are they easy to prepare?
