Money and income / revenue

• Currency
• The money used in a country, like dirhams, euros,
dollars, etc. is its currency. Money in notes
(banknotes) and coins is called cash. Most money,
however, consists of bank deposits: money that
private persons (individuals) and organizations have
in bank accounts. Most of this money is on paper—
existing in theory only—and only about ten percent is
in the form of cash in the bank.
• Personal finance
• All the money that a person receives or earns as payment is
their income (revenue). This income can include the
following:
• - a salary: money which is paid by an employer (company), or
wages—money that is paid by the day or the hour, usually
received weekly or fortnightly (i.e., every two weeks)
• -overtime: money received for working extra hours
• -commission: money that is paid to salespeople and agents,
that is, a certain percentage of the income that the employee
generates.
• -a bonus: extra money given for meeting a target or for good
financial results.
• -fees: money that is paid to professional people, such as
lawyers, certified public accountants and architects in return
for their service.
• -social security: money that is paid by the government to
unemployed and sick people
• - a pension: money that is paid by a company or by the
government to a retired person
• Salaries and wages are often paid after deductions, such social
security charges, pension contributions and income tax.
Amounts of money that people have to spend regularly are
outgoings. These often include:
• living expenses: money that is spent on everyday needs, such as
food, clothes and public transport
• -bills: requests for the payment of money owed for services, like
electricity, water, gas and telephone and internet connections
• -rent: the money that is paid for the use of a house or a flat.
• -a mortgage: repayments of money borrowed to buy a house or a
flat.
• -health insurance: financial protection against medical expenses for
sickness or accidental injuries.
• -tax: money that is paid to finance government spending.
• A financial plan, showing how much people or companies expect to
earn and spend is called a budget.
 Exercises:

• A. Complete the following sentences with suitable words for

the above sentences
• After I lost my job, I was living on social
security……………………………..for three months. This was difficult
because the amount was much lower than the salary…………….I had
before.
• I used to work as a salesperson, but I wasn’t very successful;
therefore, I did not earn…………..much commission.
• If the company makes 10% more than last year, we will all get a
bonus…………….at the end of the financial year/ fiscal year
• It will take at least 25 years to repay the mortgage……………….on my
house.
• Many European countries now have the same currency…………, the
euro.
• My wages are not very good, so I do a lot of
overtime……………..
• Nearly (almost) 40% of everything I earn goes to the
government as income tax……………
• The owner has just increased the rent………………on our
flat by 15%.
• When I retire, my pension……………..will be 60% of my
final salary.
• A financial plan showing how much money a person or a
company expects to earn and spend is called a
budget…………….
• B. Are the statements below true or false.
Justify your answers
• 1. Bank deposits are not classified as money.
• 2. People earning wages get paid more often than
people getting a salary.
• 3. people working on commission always get paid
the same amount.
• 4. When you stop working at the end of your career,
you receive a salary.
• 5. Most people pay a rent and a mortgage.
 Business Finance
• Capital lend vs borrow
• When people want to set up or start a company, they need money; this
money is called capital. Companies can borrow this money, called a loan,
from banks. The loan must be paid back with interest: the amount paid to
borrow the money. Capital can also come from issuing shares or equities,
that is, certificates representing units of ownership of a company. The
people who invest money in shares are called shareholders (stockholders)
and they own part of the company. The money they provide is called share
capital. Individuals and financial institutions, called investors, can also
lend money to companies by buying bonds (debentures), i.e., loans that
pay interest and are repaid at a fixed future date.
• Short term, medium term and long term
• The bank lends money to its clients
• Clients borrow money from their bank
• I want to buy a car, but I don’t have money.
Therefore, I will apply for a loan (credit).
• I think; therefore, I am
• I think. Therefore, I am
• I think, so I am
• Money that is owed—that will have to be
reimbursed—to other people or businesses is a
debt. In accounting, companies’ debts are usually
called liabilities. Long- term liabilities include
bonds; short-term debts, however, usually include
debts to suppliers who provide goods or services on
credit, that is, that will be paid later.
• The money that a business uses for everyday
expenses or has available for spending is called
working capital or funds. Business trip
• Revenue
• All the money coming into a company during a given
period of time is referred to as revenue. Revenue minus
(less) the cost of sales and operating expenses, such as
rent, salaries and wages, is known as profit, earnings or
net income. The part of its income that a company pays
to its shareholders is a dividend. Companies pay a
proportion of their profits to the government as tax, to
finance government spending on public services and
infrastructure. They also retain or keep some of their
earnings for future use.
• Spare parts
• Share capital revenue dividends
• Capital company profits tax
• Debt (bonds & loans) expenses retained earnings
• Financial statements:
• Companies give information about their financial
situation using financial statements. There are
different types of financial statements; the balance
sheet shows the company’s assets— all the things of
value that the company owns-- and its liabilities, i.e.,
the money that the company owes as well as its capital,
at a particular period of time, usually the end of
financial year/ fiscal year. The profit & loss
account (or income statement), on the other hand,
shows, the company’s revenues and expenses during a
particular period, such as a quarter, a semester or a
year.
Exercise: Fill in the blanks with the right word from the text
above.

• Small companies often try to get bank loans when they

need to ………….money.
• We do not have sufficient ………to build a completely
new factory.
• Details of a company’s liabilities are shown on the
………………………
• We are going to ………..more money by selling new
shares to our existing…………..
• We are going to ………….some of the people who lent us
money and reduce our …….
• We had to raise a $50000 ……………in order to start the
business
• I decided to buy a ………….of $10000 instead of shares
because it is a safer investment.
• Another term for profit is ……………………
• I think this is a good investment. It pays an ……………..of
8%.
• When they saw our financial statements, the bank
refused to …………….us money.
• Profit is the difference between …………….and ……………
• The …………………….shows if a company is receiving more money than it is
spending.
• If you do not like taking risks, you should only ……………..in very successful
companies
• A company’s retained earnings belong to its ………………..
• Anything that a company uses to produce goods or services is an ………….
• When the company makes a big profit, shareholders expect higher …………
• Our sales increased a lot last year, so our ………….went up.
• Thirty percent (30%) of our profits goes straight to the government as
……….
•