UNIT 12: ACCOUNTING AND FINANCIAL STATEMENT

LISTENING 1:
1)
A: What do you do every day?
B: I work with large companies. They call us when they want to buy another company, for
example. Then they make a takeover bid.
A: And you help them?
B: Yes. They also sometimes want to join together with another company to make one company.
That's a merger.
2)
A: Is your job interesting?
B: Yes, it is. I help people when they buy a house or a flat.
A: Do you also offer current accounts and deposit accounts?
B: We offer some deposit accounts and we pay interest on them. But I don't usually open
accounts. I mostly work with mortgages.
3)
A: What happens in your job?
B: I do many different things. I sometimes open current accounts or deposit accounts.
A: Do you do other things, too?
B: Yes, I help people save for a pension. I usually work with private customers and small
companies.
LISTENING 2:
(C = Caroline; M = Mr Müller]
C: Good morning, Mr Müller. I need to talk to you about your account.
M: Is there a problem?
C: Not really. I just see that you often overdraw it and then have to pay interest on the overdraft
amount.
M: Yes. I have my own company and we sometimes have cash flow problems.
C: I see.
M: If I do a job for a customer, I sometimes have to wait for several months for the money.
C: So you can't pay all your bills right away?
M: Right. That's why I must have an overdraft facility. It covers my expenses.
C: But it can be the most expensive way for you to borrow money.
M: Do you have a better idea?
C: If you have a short-term loan, you don't have to pay such high interest. The rates are lower
than the overdraft facility.
M: Really? That sounds interesting.
C: I have an application form here.
M: What do I have to do?
C: You just need to fill it out and talk to a loan officer,
M: Do I need to do anything else?
C: No, you don't need to do anything else. You just have to give the loan officer information
about your income and expenses. If you decide that a loan is a good idea, he will also explain the
instalments to you.
M: Thank you very much.
C: No problem, Mr Müller.
LISTENING 3:
[I - Interviewer: SJ - Steve Jones)
I: Good morning, listeners. I'm here with Steve Jones of Events & Co. Steve, can you tell us
about a recent event?
SJ: No problem - we've just finished one! The customer asked us to set up an evening to promote
a new type of garden furniture. The event was in June, so we began to organise it in January. The
cost for the event was €25,000 and we got €12,500 in January. We started to make a video for
them and this cost us €2,800 altogether. Next we set up a photo shoot for advertising
I: And how did that go?
SJ: Well, we planned this for the second week in
February but had bad weather. We had to wait till the next week. So we had to pay the people
who were in the shoot extra for their time. That cost us €2,700.
I: Oh! What did you have to do next? SJ: The next step was to find someone to be in charge of
the evening. We found someone for €2.200. But he got another job and we had to look again in
March. In the end, we paid €3,500 for the new person we found.
I: Mm, was that the end of the problems?
SJ: Not completely. We had a contract with the location and the deposit was €2,500 in April. We
didn't have enough cash then and used our overdraft. This cost us €150 in interest.
I: Sounds complicated to me. And then what happened?
SJ: In May another client suddenly cancelled an order. Then we had to arrange a short-term loan
with the bank for €15,000. The first thing we did was pay €3,000 for the food.
I: Mhm. And then what happened?
SJ: We hoped our problems were over. But at the beginning of June the company told us that
only half of their guests were coming, so we had to change the order for the food. We missed the
cancellation deadline, so our costs came to an extra €1,500.
I: Oh! And how did the event go?
SJ: The event was a big success and we made money on it. In June we invoiced the company for
the rest of the money they owed us. In July they paid us the rest, so we got €12,500. Then we
were able to pay back the bank loan of €15,000 plus the interest, which came to €375.
LISTENING 4: Same as above
LISTENING 5:
RICHARD BARKER So, a company's balance sheet, in principle, is intended to give you the
value of the company's business, but in practice, some assets are very easy to value, and some are
very difficult to value. So if you hold some shares in another company or something, or you hold
some money in a bank account, this is very easy to value. On the other hand, if your assets
comprise research and development, or people for that matter, then it's in principle very difficult
to put a value on those things. And when you measure the profit of a company, what you're
trying to do is measure a change in value, so the difference between what a company is worth at
the beginning of a year, and what it is worth at the end of a year, is the profit that it makes, or the
loss that it makes. And if it's difficult to measure the value of assets in the first place, it's also
difficult to measure whether a company's making profit or not.
So an example might be ... take an airport, and a runway on an airport. Well, what's a runway
worth? would be one question. You could estimate that maybe, you could estimate how long you
think the airport will operate for, how many planes will land on it, what the value of one airport
will be, what the value of Heathrow would be in comparison with the value of Gatwick, for
example. But it's actually quite a subjective thing to measure. And then you've got to figure out,
well, how long is this thing going to last, because every year you want to take the depreciation on
that runway and charge it against profit - you want to take a reduction in the value of the runway,
and if you think the runway will last 25 years, then you will depreciate it four times as quickly as
if you think it will last 100 years. So there's lots of estimation and judgement in accounting
because the value of an asset depends upon the future uncertain events, and those uncertain
events, by their very nature, can't be estimated very easily.