Accounts

Question 1

revenue

Answer 1

income/turnover/sales/the top line

Question 2

cost of goods sold

Answer 2

(=direct loss) includes manufacturing costs, salaries of manual (=blue collars) workers etc.

Question 3

operating expenses

Answer 3

(=indirect costs/overhead) include salaries of sales and office staff, marketing costs, utiliti bills etc.

Question 4

non-operating income

Answer 4

includes profits from investments in other companies

Question 5

EBITDA

Answer 5

stands for Earnings Before Interest, Tax, Depreciacion and Amortization

Question 6

Earnings

Answer 6

=profit/the bottom line

Question 7

Depreciacion and Amortization

Answer 7

are very similar, and are often used in the same way. However, ‘depreciation’ can refer to the loss in value of a tangible asset and ‘amortization’ to the loss in value of an intangible asset. This loss over time is treated as a cost and written off (= subtracted from the profit) over several years.

Question 8

Interest

Answer 8

refers to money paid to the bank for loans (or received from the bank for cash balances)

Question 9

Dividends

Answer 9

is money paid to shareholders

Question 10

Retained profit

Answer 10

is transferred to the Balance Sheet, where it joins the amounts from previous years

Question 11

Accounts receivable

Answer 11

is the amount owed to the business by customers (creditors)

Question 12

Inventory

Answer 12

is the value of raw materials & stock

Question 13

Current assets

Answer 13

may also include ‘marketable securities’ (=shares intended for disposal within one year)

Question 14

Fixtures

Answer 14

are part of a building that cannot be moved, such as lights

Question 15

Fixed assets

Answer 15

may also include long-term financial investments

Question 16

Intangible assets

Answer 16

include patents, trademarks & ‘goodwill’ (reputation, contacts and expertise of companies that have been bought)

Question 17

Bank debt

Answer 17

(=loan capital) also includes any overdraft (=temporary negative balance)

Question 18

Accounts payable

Answer 18

is the money owed to suppliers

Question 19

Accrued

Answer 19

items are those where an expense has been incurred, but the money is not yet paid. ‘Accrued salaries’ typicaly includes future bonuses

Question 20

Provisions

Answer 20

can appear under current liabilities. These are amounts set aside for anticipated one-time payments that are not part of regular operations - perhaps a lawsuit or a compensation package for employees being laid off

Question 21

Mortgage

Answer 21

is a long-term bank loan to buy a property

Question 22

Principal

Answer 22

(=amount raised by issuing the bonds) is repayable to the bond holders at ‘maturity’

Question 23

Share capital

Answer 23

(= common stock, AmE) is amount raised at initial flotation on the stock market

Question 24

Retained profit

Answer 24

(=reserves/retained earnings)