A. Read the text, give the English equivalents for the words in brackets, and single out the main items of the income statement

D. Match the words in two columns to make expressions and complete each sentence with the correct expression.

Exceptional	expenses
Interest	period
Operating	profit
Profit and loss	items
Reporting	payable
Retained	account
Selling and general	earnings

1. All businesses maintain records based on ____________ of 12 months.

2. The company’s ______________ has increased by 10 per cent this year.

3. We kept $30.000 from our profits as ________________ to be transferred to reserves.

4. This year we fortunately didn’t have any _________________ in the income statement.

5. ____________________ compares the revenue earned for a period of time with the expenses incurred for the same period.

The purpose of (отчет о прибылях и убытках) (sometimes called the earnings statement) is to report upon (прибыльность) of a business organization for a stated period of time. In accounting, profitability is measured by comparing the revenues generated in a period with the expenses incurred to produce those (доходы). Revenue is defined as (приток активов) resulting from the delivery of products or (предоставление услуг) to customers. Many firms earn their revenues by selling their customers (материальные товары), such as automobiles, office equipment, cameras, or paint. Others, called service firms or businesses, earn their revenues in the form of (взносы или комиссионные) by rendering various types of services to customers, such as the fees for the professional services rendered by accountants, architects, lawyers, or physicians or commissions from the sale of (страхование жизни, имущества от несчастного случая) or (недвижимость). Other types of services generate revenues for other firms – (заработанный процент) by banks and small (заемные компании), the premiums received by (страховые компании), the admissions charged by theatres, or the rents collected by firms (владеющие) apartment buildings. The revenues earned are measured by (стоимость активов) customers are willing to surrender for the products or services received.

Expense is defined as the (жертва) made or the cost incurred (производить доходы). The expenses incurred can be classified into a number of categories that differ among firms. Common expense categories are (заработная плата и жалованье), (коммунальные услуги) (electricity, gas, oil, telephone, and water), insurance, taxes (both on property and on income or earnings), supplies used, (реклама), and interest. Expense is measured by the cost of the assets surrendered or consumed in serving customers. The process of comparing the revenues earned with the expenses incurred is referred to as matching. Expenses are matched against revenues (определить чистый доход). If revenues (превышать) expenses, net income results. If the reverse is true, the business is operating at a loss.

In a technical sense, the income statement is subordinate to the balance sheet. This is because it shows in some detail the items that collectively (объяснять) most of the period’s net change in only one balance sheet item, (нераспределенная прибыль). (“Most” excludes dividends as well as a few relatively unusual retained earnings changes). Nevertheless, the information on the income statement is regarded by many to be more important than information on the balance sheet. This is because the income statement reports the results of operations and indicates reasons for (прибыльность организации) (or lack thereof).

The importance of the income statement is illustrated by this fact: in situations where accountants, in recording an event, must choose between a procedure that (искажать) the balance sheet or one that (искажать) the income statement, they usually choose not (искажать) the income statement.

In practice, there is (значительное разнообразие) in the formats and degree of detail used in income statements. Less detailed income statements are published in (годовые отчеты корпораций) to their shareholders. Income statements prepared for the managers of an entity usually contain more detailed information.

The heading of a statement must show (1) the entity to which it relates, (2) the name of the statement, and (3) the time period covered. To provide the basis for comparison (Комиссия по ценным бумагам и биржам, США) requires that corporate annual reports contain income statements for the most recent years and balance sheets as of the end of the most recent two years.

Illustration 5.1.

PROFF COMPANY

Income Statement

For the Month of July 200X

Service revenues		$5700
Expenses:
Wages	$2,600
Gas and oil
Rent
Advertising
Utilities
Interest		3,63
Net income		$2,070

Illustration 5.1 (содержать) the statement of the PROFF Company for the Month of July 20XX. It shows that revenues in the amount of $5,700 were generated by serving customers. Expenses for the month (достигать) $3,630, resulting in net income before taxes for the month of $2,070.

It is easy to determine from (балансовый отчет) and (отчет о прибылях и убытках) whether the issuing company was a merchandiser or a manufacturer.

b. Consider the CONSOLIDATED INCOME STATEMENT given below. Match the English word combinations in the left-hand column with the Russian equivalents in the right-hand column:

CONSOLIDATED INCOME STATEMENT

For the sixth months ended in June 30, 200X

In EUR thousand

		June 30, 200X	June 30, 200X	Change in %
1.	Revenue				a.	Совокупный доход
2.	Licensing	55,250	100,311	-45	b.	Прочее
3.	Maintenance	102,323	93,689		c.	Консолидированная чистая прибыль
4.	Professional Services	81,503	91,908	-11	d.	Стоимость материалов и обслуживания
5.	Other		1,533	-52	e.	Лицензирование
6.	Total Revenue	239,810	287,441	-17	f.	Прочие операционные расходы (3)
7.	Increase/decrease in finished goods and work in progress	2,869	2,058		g.	Доля меньшинства («неконтрольный» пакет акций: <50%)
8.	Other operating income (1)	40,235	14,646		h.	Услуги профессио-нального характера
9.	Expenses				i.	Дополнительные расходы
10.	Cost of materials and services	-21,871	-25,297	-14	j.	Прибыль до налогообложения
11.	Personnel expenses	-136,252	-137,738	-1	k.	Налоги
12.	Depreciation and amortization (2)	-16,036	-15,771		l.	Общефирменные расходы (административные расходы плюс расходы на сбыт и распространение)
13.	Other operating expenses (3)	-84,820	-87,962	-4	m.	Износ и амортизация (нематериальных активов) (2)
14.	Total operating expenses	-258,979	-266,768	-3	n.	Прочая операционная прибыль (прибыль от ведения операций) (1)
15.	Financial income, net	-1,728	2,747	-163	o.	Расходы на содержание персонала
16.	Extra expenses		-20,179	-100	p.	Доход
17.	Income before taxes (before-tax income)	22,207	19,945		q.	Финансовый доход, чистый (без вычетов)
18.	Taxes	-10,437	-9,175		r.	Расходы (издержки, затраты)
19.	Income after taxes (after-tax income, income net of tax)	11,770	10,770		s.	Увеличение / уменьше-ние количества готовых изделий и незавершен-ного производства
20.	Minority interests				t.	Прибыль после налогообложения
21.	Consolidated net income	11,770	10,770		u.	Эксплуатационные расходы

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