Business vocabulary related to ACCOUNTING
Universidad de Santiago de Chile
Facultad de Humanidades
Lic. en educacin en ingls
Introduction to ESP
Business vocabulary related to ACCOUNTING
Balance SheetIts a summary of a companys financial position at a
specific point in time, usually the end of its financial year. It
indicates the value of everything the company owes (or its assets)
as well as everything that it owes (or its liabilities).As an
example: Our balance sheet is not as strong as last year, since
weve taken some heavy losses on investments.
AssetIts anything owned by a company that can be used to
generate money or an income. It can be tangible, meaning that it
has a physical existence, as can be cash, or any equipment and
property; or can also be intangible, meaning that it doesnt have a
physical existence, as can be a patent or copyright.
For example: Most oh the companys assets consists of accounts
receivables from very risky customers and, until theyre paid, its
hard to be sure of their actual value.
Consulting firms usually have few tangible assets, and their
main intangible asset is the reputation theyve established.
Liability
Is a financial obligation or debt held by a company, normally
liabilities can be accounts payable, bank loans and outstanding
taxes.For example: Managing liabilities effectively is critical to
good financial planning.
There are two types of liability: Short-term liabilities, and
long-term liabilities.
Short-term liabilities are the ones paid within one year, while
long-term ones are repayable after more than a year.
For example: Our short-term liabilities have grown very quickly
this year, as we expanded into new territories.
Profit
It is the amount of money earned in a given period, normally a
year, after deducting all its expenses.
As an example: Profits for many firms have declined due to a
slowdown in consumer spending.
Profit Margin
It is the percentage of income a company retains after all costs
are deducted. If the cost of a product is as high as its selling
price, then the profit margin would be very low.
Example: The profit margin on luxury automobiles is much higher
than on economy vehicles.
Loss
It is like a profit but in negative terms, companies make a loss
(or take a loss) if a single transaction costs more than it
earns.Example: Weve always taken a loss on our equipment sales, but
we make it up by generating revenue through after-sales
service.
Companies run at a loss if their profit is negative for an
entire year.
Example: Companies that run at a loss for several years may be
forced to stop trading on the Stock Exchange.
Profit/Loss Statement
Its a type of accounting report that companies publish on a
regular basis.
Debt
It is money owed by a company to another company or an
individual. Most corporate debt is in the form of loans from banks,
or bonds that have been sold to investors.
Example: This years balance sheet shows that the companys bank
debts have been fully repaid.
Gross
A gross figure is a sum that does not include any deductions. We
describe the total amount of money earned by selling a companys
products as gross income, or revenue.
Example: The Companys gross sales have risen 20% in the last
quarter alone.To gross could be a verb as well, meaning to earn
gross income.
Example: The film was a great success, and grossed more than $50
million on its first weekend.
Net
A net figure is a sum that includes all deductions. We describe
the amount of money earned through a companys sales after
subtracting all costs as net income, or profit.
Example: We netted more than $100000 from a single day of
direct-marketing sales.
To net is also a verb, which means to earn net income.
Pretax
It is an adjective which means before payment of tax.
Accountants normally show pretax profit or pretax income on one
line of a companys financial statement, and show profit after tax
on a separate line.
Example: Our overseas results look better on a pretax basis,
because we operate in several countries where corporate taxes are
very high.