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Income statement

The company uses its assets to produce goods and services. The company’s success depends on whether it is wise or lucky in the assets it chooses to hold and in the ways it uses these assets to produce goods and services. The company’s success is measured by the amount of profit it earns. Net income is the accountant’s term for the amount of profit that is reported for a particular time period. The company’s income statement for a period of time shows how the net income for that period was derived. The first line in the company’s income statement shows the company’s net sales revenues for the period: the assets obtained from customers in exchange for the goods and services. The second line summarizes the company’s revenues from other sources. The income statement next shows the expenses of the period: the assets that were consumed while the revenues were being created. The expenses are usually broken down into several categories (cost of merchandise sold, salaries of employees, depreciation, and etc.) indicating what the assets were used for. The income statement shows only a single number, the net gain on the sale. If net income is negative, it is referred to as a net loss.

II. Restore the word order in the questions and answer them.

1) What the company’s income statement does show? 2) What the first line in the company’s income statement show does? 3) What the second line in the does company’s income statement summarizes? 4) What does expenses the income statement show? 5) What does number the income statement show? 6) What is to as a net loss referred?

III. Translate the following questions from Russian into English and answer them.

1) Чистый доход – это доход после уплаты всех налогов? 2) Чистый убыток – это когда расходы превышают доходы? 3) Что включает в себя понятие «стоимость»? 4) Что включает в себя понятие «издержки»? 5) Зарплата работающих по найму отражена в отчете о доходах? 6) Амортизация – это постепенное снижение ценности основных фондов вследствие их изнашивания? 7) Амортизация – это постепенное перенесение стоимости основных фондов на вырабатываемую продукцию с целью накопления средств для их обновления?

IV. Complete the statements.

1) The company uses … 2) The company’s success depends on … 3) The company’s success is measured by … 4) Net income is … 5) The company’s income statement shows … 6) The first line in the company’s income statement shows … 7) The second line in the company’s income statement summarizes … 8) The income statement next shows … 9) The expenses are broken down into … and indicate … 10) The income statement shows only …

V. Read the text.