Finance

1 By investing in the market, can make good profits.

However, there is no guarantee that the equities will and investors can also
suffer losses. If you want security for your , it is better to put it into a fixed-
interest savings account.

appreciate stockholders investment equity

2 Many companies allow terms with payment up to 60 days.

This is a benefit: a manufacturer can buy materials and turn them into finished
products ready for sale before paying for the original materials.

credit solvent tangible deferred

3 The external found that the company’s had been

putting items into the wrong accounts. After making all the necessary , the
accounts for the financial period.
accountant adjustments audit balanced

4 Alan Harris was very pleased when his stock investments over $50,000
in one year. When he came to complete his return for the year, he had to
declare the profits he had made and knew the at which tax was charged
would be high because the income was unearned.

rate tax earned interest

5 Government are a popular and safe form of investment. The investor is

buying various government securities into one stock. The rate
of interest may not be as high as with other forms of investment, but there is very little risk, as
a fixed rate of return is guaranteed.

secured annual bonds consolidated

6 When Oriental Foods bought a new fleet of delivery vans, their accountant
made a in the accounts to the value of the vans by 20% per annum.

budget appreciate
take depreciate
provision gearing
audit adjust

7 Companies involved in international trade have to make frequent adjustments because of

fluctuating rates. Druckers, Ltd., a company which makes children’s clothing,
sells widely to international markets. Recent fluctuations have helped and the on
this year’s accounts shows a healthy profit.

currency bottom line

cash on stream
finance break even
forecast revenue

1
8 ICN’s financial for the year were greeted with relief by the company’s
executives and stockholders. The profit was $2 million and reduced
overheads meant that pre-tax profit rose by 15% to $900,000. After paying tax ,
there would be a net profit of $ 620,000.

liability gross results charge

9 The company has decided to its new research and development plans by
selling some of its capital . The sale of the factory buildings which are no
longer required is to raise a sum of $250,000.

fund assets credit

appreciate profits forecast
defer accounts secure
renew proceeds reliable

10 HiTec Ltd., is a fast-growing company which recently needed to expand its

operations. The bank agreed to finance part of the cost of the lease on the premises. The
company will __________ costs over a 7 – year period. The additional costs
_____________ by the purchase will be covered by increased production and the
company’s ____ has been adjusted to reflect this.

sustain financed bottom line

appreciate incurred budget
amortize earned annual
secure valid account

11 A few years ago, many banks lost money because they made loans to
customers. When the economy went into recession, many of these customers were unable to
repay the loans. The banks had to these loans as bad debts. Their profit
_______ were sharply reduced and in some cases, banks recorded net losses. However, the
situation was and most have returned to profitability.

write off short-term margins unsecured

12 Our production are too high; we only when we have

sold 40,000 units. This means we have to operations with a bank loan. We
must find ways of cutting costs and increasing sales if we are ever to make a .

finance break even costs profit

13 The company’s accounts showed a of 3 : 1 in favour of liabilities

over assets. The bank loan of $300,000 was set against stockholder of
$100,000. The company’s accountant thought that this was to high and
advised them to sell a minority they had in another company and use the
proceeds to reduce their debt.

gearing ratio holding capital