Englisch II
Accounting and financial statements
Accounting and financial statements
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Cartes-fiches
Trial balance
A Trial balance is prepared at the end of each accounting period and is a summary of the information from the journals – where entries are recorded – to check whether the figures are correct.
Profit and loss account
Profit and loss account summarises business activity over a period of time. It begins with total sales generated during a month, quarter or year. Subsequent lines deduct all of the costs related to producing that revenue.
Balance sheet
Balance sheet is reports the company’s financial condition on a specific date. The basic equation that has to balance is: Assets = Liabilities + Shareholder’s equity.
Assets
Assets are anything of value owned by a business. They are listed according to how easily they can be turned into cash.
Liabilities
Liabilities are any amounts owed to a creditor. They are listed according to how quickly creditors have to be paid.
Ratio analysis
Ratio analysis analyses the performance in more depth, to compare the companies in the same industry. It includes for example the liquidity ratios or the profitability ratios.
Debt financing
Debt financing means taking up a loan from a creditor. In the short term, examples are trade credits or bank loans. In the long term, a borrower can issue bonds.
Depreciation
Depreciation is the loss in value of a tangible asset over time.
Leverage ratio
Leverage ratio is the extent to which a firm relies on debt rather than equity financing.
