The bottom line

Accounts

Hi, I’m Fiona and I’m an accountant. I work in Edinburgh for one of the big accountancy firms. We look at the financial records or accounts of a lot of companies. We work with the accountants of those companies, and the people who work under them: the bookkeepers. I like my profession: accountancy.

Sometimes we act as auditors: specialist outside accountants who audit a company’s accounts, thiat is, we check them at the end of a particular period to see if they give a true and fair view(an accurate and complete picture). An audit can take several days, even for a fairly small company.

When a company’s results are presented in a way that makes them look better than they really are, even if it follows the rules, it may be accused of creative accounting or window dressing. Of course, I never do this!

Words

accountant /əˈkaʊntənt/ ★★☆ n.

[countable] someone whose job is to keep and check financial accounts, calculate taxes etc

Just as an accountant might use a financial model, the analyst can develop an entity model.

accountancy /əˈkaʊntənsi/ n. SYN AmE accounting

[uncountalbe] the profession or work of keeping or checking financial accounts, calculating taxes etc

Their purpose is to examine different aspects of the relationship between law and accountancy.

account n.

[countable] financial record

bookkeeper n.

[countable] a personwhose job is to make an official record of all the money received into and paid out from a business

the need to find an experienced and competent bookkeeper

competent /ˈkɒmpɪtənt $ ˈkɑːm-/ ★★☆ adj.

having enough skill or knowledge to do something to a satisfactory standard OPP incompetent

A competent mechanic should be able to fix the problem.

audit /ˈɔːdɪt $ ˈɒː-/ n

[countable, uncountable] an official examination of a company’s financial records in order to check that they are correct

the annual audit

a detailed examination of something in dorder to check if it is good enough

Start with an audit of existing services within the community.

audit vt.

to officially examine a company’s financial records in order to check that they are correct

AmE to attend a course at university without intending to take examinations in it or get a credit for it

true and fiar view n.

[singular] words used in a company’s accounts by auditors to show that they think the accounts give correct and complete information about a company’s financial situation

The accounts gave a true and fair view of the company’s business.

creative accounting n.

[uncountable] the process of using unusual but not illegal ways to change business accounts to make them look better than they really are

The profession’s worst problem is creative accounting.

window dressing n.

[uncountable] something that is intended to make people like your plans or activities, and to stop them seeing the true situation - used to show dispproval

All these glossy pamphlets are just window dressing - the fact is that the new mall will ruin the neighborhood.

Results

‘A firm reports its performance in a particular period in its results. Results for a particular year are shown inthe company’s annual report. This contains, among other things, a profit and loss account.

In theory, if a company amkes more money than it spends, it makes a profit. If not, it makes a loss. But it’s possible for a company to show a profit for a particular period because of the way it presents its activities under the accounting standards or accounting rules of one country, and a loss under the rules of another. My firm operates in many countries and we are very aware of this!

A pre-tax profit or a pre-tax loss is one before tax is calculated. An exceptional profit or loss is for something that is not normally repeated, for example the sale of a subsidiary company or the costs of restructuring. A Company’s gross profit is before charges like these are taken away; its net profit is afterwards. The final figure for profit or loss is what people cal informally the bottom line. This is what they really worry about!

If a company is making a loss, commentators may say that it is in the red. They may also use expressions with red ink, saying, for example, that a company is bleeding red ink or haemorrhaging red ink.’

Words

annual report n.

a paper which announce detailed information whthin a year

profit and loss account n.

a financial statement showing a company’s income, spending, and profit over a particular period

Draw up a balance sheet and profit and loss account for Stern.

In thesedays, Usually use term ‘income statement’ more than ‘profit and loss accunt’

make a profit / loss

get profit or loss from something

accounting standard n. SYN accounting rule

[countalbe] an official instruction on how something must be treated and presented in accounts

pre-tax profit

a profit for a particular period of time before tax is taken away

The company reported pre-tax profit of 175 billion yen, net of 94 billion yen on sales of 3.228 trillion yen.

pre-tax loss

a loss made by a company before tax is calculated

The network took pre-tax losses estimated at $275 million, and an after-tax loss of $170 million.

exceptional profit

a profit relating to an unusuall event that is not part of a company’s normal operating activities, for example the sale of part of the company

exceptional loss

a loss relating to an unusuall event that is not part of a company’s normal operating activities, for example the sale of part of the company

The sale of the company’s printing unit resulted inan exceptional loss of £1.1 million.

gross profit n

[countable] the difference between what something costs to produce and what it is sold for

gross profit = sales revenue - COGS

net profit n.

the profit from a deal, or from business activity for a particular period oftime, after all costs and taxes are taken away

Their contract stipulated that they were entitled to a fee of 41% of the film’s net profit.

bottom line n.

the profit or the amount of money that a business makes or loses

He figured the currency hedge cost Tomkins 4 million pounds on its bottom line in the first half.

be in the red

to owe more money than you have OPP be in the black

This is the airline’s fourth straight year in the red.

red ink n.

[uncountalbe] used to talk about financial difficulties that companies are experiencing

The latest financial results from US computer companies are swimming in red ink, due to a slowdown in US sales.

bleed red ink

if a company or business bleeds red ink, it loses a lot of money, rather than making money

Analysts predict the retailer will continue to bleed red ink, with losses topping $180 million.

haemorrhage red ink

if a business, organization etc haemorrhages red ink, it loses a lot of meney

The state’s long-term fiscal management has been solid, although the current budget threatens to hemorrhage red ink

It is the end of this time : )