 Profit and Loss account or Income StatementProfit and loss account or also known as the income statement is one of the major financial statements (others include: balance sheet, the cash flow statement, the statement of stockholder’s equity).
Profit and loss account shows the profitability of a company in a given period of time. There are certain elements in the P&L which refer to revenues or gains from a certain type of activity or expenses and losses:
Take this short quiz to check what you already know: 1. Amounts earned by a company in its main operating activities are: a. Revenues b. Gains 2. A company sells a car that is no longer used in its business. The amount received is more than the book value of the asset. The company will report a(an): a. Expense b. Gain c. Loss d. Revenue 3. Is a company’s Interest Expense: a. an operating expense or b. a non-operating expense? 4. Net Sales minus the Cost of Goods Sold (COGS) equals: a. Gross profit b. Net income 5. Gross profit minus Operating expenses is also known as: a. Net income b. Operating income Now check your answers below. Would you like to learn more about accounting in English? Contact me. Key: 1. a/ 2 b / 3 b/ 4 a/ 5 b Glossary: Profit and loss account (P&L) or Income Statement – Rachunek Zysków I Strat Profitability – rentowność Revenues – przychody Gains – zyski finansowe Expenses – wydatki Losses – straty Operating activity – działalność operacyjna Investing activity – działalność inwestycyjna Financial activity – działalność finansowa Single-step – format uproszczony Multiple-step – format kalkulacyjny Net income – przychody netto Cost of goods sold – koszt sprzedanych towarów Book value – wartość księgowa Interest - odsetki
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 What is Master Budget?
it is a strategy that documents expected future sales, productions levels, purchases, future expenses incurred, capital investments, etc. Find out how to calculate Master Budget Read the text: How to prepare a master budget? Start with your sales.
EX. 1 Match the words in bold with their definitions below:
check your answers below. Glossary: master budget - budżet łączny expected sales - przewidywana sprzedaż purchases - zakupy expenses incurred - poniesione wydatki/nakłady pieniężne to estimate - oszacować direct labor - koszty bezpośrednie robocizny overheads - koszty ogólne, pośrednie cash flows - przepływy pieniężne financial statements - sprawozdania finansowe np.: bilans, RZiS Klucz: 1. financial statements, 2. generate, 3. quantity, 4. cash flows, 5. inflows, 6. estimate Are you an accountant? Do you need to speak English at work? Are you preparing budgets or financial reports? Contact me to schedule your free trial lesson.  English for Finance - Depreciation DepreciationDEPRECIATION VS. AMORTIZATION When do accountants use the term ‘depreciation’ or ‘amortization'? When they talk about different types of fixed assets (fixed – assets which are not likely to be converted quickly into cash). Depreciation – it is a reduction in the value of a tangible asset (e.g. land, machinery, vehicles, equipment, inventory) over time due to wear and tear. Amortization – it is a reduction in the value of an intangible asset (the one that is not physical in nature e.g. Goodwill, brand recognition, intellectual property) over time. METHODS OF DEPRECIATION The popular methods of depreciation include: Straight-line – depreciation is in equal amounts over the estimated life of the asset. Double Declining Balance - is an accelerated method, which counts as an expense twice as much of the asset's book value each year compared to straight-line depreciation. Unit-of-production - is usesuful when an asset's value is related to the number of units it produces and not necessariliy the number of year it is in use. EXERCISE Let’s compute depreciation using the Straight-line method: Cost – how much the company paid for the asset Salvage Value (residual or scrap value) – the estimated book value of an asset after depreciation is complete Estimated life of asset / Useful life – the estimated number of years the asset is likely to remain in service Annual depreciation – yearly depreciation e.g. The company purchased a car for PLN 40.000 – cost of asset, estimated life – 5 years, estimated salvage value – PLN 8.000 Cost – Salvage Value/Estimated life = Annual Depreciation PLN 40.000 – PLN 8.000/5 years = PLN 6.000 Therefore the annual depreciation of this tangible asset (a car) will amount PLN 6.000. Below you will find the glossary of terms (EN-PL) and a video explaining the above mentioned methods of depreciation: Glossary – EN – PL: Depreciation - amortyzacja środków trwałych materialnych Amortization - amortyzacja środków trwałych niematerialnych i prawnych Assets - majątek, środki Fixed asset - środek trwały Tangible asset - środek trwały materialny Intangible asset - środek trwały niematerialny Reduction in value - spadek wartości Goodwill - wartość firmy Straight-line depreciation - metoda liniowa amortyzacji Declining-balance depreciation - metoda degresywna amortyzacji Units-of-production depreciation - metoda amortyzacji przypadająca na jednostkę wyprodukowaną To compute - obliczyć To purchase - zakupić Salvage / scrap / residual value - wartość umorzeniowa, cena po amortyzacji Estimated life of an asset / Useful life - czas użyteczności środka Annual depreciation - amortyzacja roczna |
AuthorKatarzyna Sawicz 
Key facts:
- teacher of English - interpreter PL-EN, EN-PL - B.A in English Linguistics, M.A in Linguistics, Sworn and Business Translations, Financial Analysis and Reporting - over 18 years experience teaching and designing materials - experience teaching online to individuals and small groups - experience teaching in-company - 3500+ hours of online lessons Archives
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