Lesson 25 Financial Statements ‘Study the following definitions and examples. 1. desire v., to wish for a. We desire to have our own home. b,_He desires to retire when he becomes forty. 2, detail v,, to report or relate minutely or in particulars a. The office manager detailed each step of the inventory process at the staff meeting. b. Fabio created a financial statement that detailed every expected expondi- ture for the next quarter. 3. forecast n., & prediction of a future event; v, {0 estimate or calculate in advance ‘a, The financial forecast indicates a deficit in the next quarter. b. Analysts forecast a strong economic outlook. 4, level n., a relative position o rank on a scale a We have never had an accountant work at such a sophisticated level before, b. The meeting was only open to staff at the assistant director level or higher. 5. overall ad), regarded as a whole; genoral a. The company’s overall expeciations were out of proportion. b. Overall, our costs are running true to prediction. 6. perspective n., a mental view or outlook a. The budget statement will give the manager some perspective on where the casts of running the business are to be found. . Joseph's accountant gave him some perspective as woll as some data on how much he could expect to eam in his frst year in business. 7. project v,, to estimate or predict ‘a. We need to project our earrings and expenses in order to plan next year's budget. 'b. The director projects that the company will need to hire ten new employees this year. 8. realistic ad), tonding to or expressing an awareness of things as they really are Stefano found that an accurate accounting gave him a realistic idea of his business's financial direction. b. Realistic expectations are important when you review your financial statements. 9. target v., to establish as a goal; n., a goal a. We targeted March as the deadline for completing the financial statement. b. Most managers target desited income as the primary criterion for success. 10. translation n., the act or process of transleting ‘a, The translation of the statement from Japanese into English was very helpful. b. The accountant was able to provide a translation of the economic terms used in the meeting. 11. typically adv., acting in conformity to a type: characteristically a. Office expenses typically include such things as salaries, rent, and otice supplies. b. The director typically dominates tho staff mestings. 12. yield n., an amount produced; v., to produce a profit a. Henry's budget gave him the desired yield: a bettor indication of his expected profit. b. The company's investment yiekied high returns. 159154 600 ESSENTIAL WORDS FOR THE TOEIC TEST WORDS IN CONTEXT Read the following passage and write the words in the blanks below. desired evel projected ‘translate detailed overall realistic typical forecasts perspective target yield Abbusiness budget focuses on future profits and future capital require ments. A budget can help the business owner determine the amount of profit the business is expected to make, the amount of sales it wil take to reach a goal, and what (1) of expenses are attached to those sales. A business establishes a (2) 2 goal to work toward. A business (8) the sales that will be needed to reach this target. Projecting or planning ahead is part of (4) business planning, When creating a (5) income statement, a business owner tries to determine how to reach the © target. The annual profit must be sufficient to (7)___the owner a return for his or her time spent oper- ating the business, plus a retum on the investment. The owner's target income is the sum of a reasonable salary for the time spent running the business and a normal return on the amount invested in the firm. ‘After projecting the income needed, the business owner has to (8) ___ the target profit into a net sales figure for the forecasted period. The owner has to determine whether this sales volume is (9)__. One useful technique is to break down the required annual sales into a dally sales figure to get a better (10)____ ofthe sales required to yield the annual profit ‘At this stage in the financial plan, the owner should create a (11) ________ picture of the firm's expected operating expenses. Many books and business organizations give (12)_________ operating statistics data, based on a percentage of net sales. The business's accountant can help you assign dollar val- ues to anticipated expenses. Developing a projected income statement is an important part of any financial plan, as the process forces the business owner to examine the firm's future profitability,WORD FAMILIES LESSON 25: FINANCIAL STATEMENTS 155 desire ‘Our manager is trying to predict how many customers will desire our product over the next quarter. desire Her desire for greater control of the business led her to discuss her need for more information with her accountant. desirable The category summary, while desirable, was time-consuming to prepare. detail The job description details all the duties of this position. detail The budget report needs to be accurate down to the last detail. detailed The director asked for a detalled description of our mesting. Project ‘The budget summary helped us project our expenditures for the year. project ‘The financial project was time-consuming and challenging. projection Maurice's projections for the upcoming fiscal year were not as helpful as we trad hoped. realize ‘The plan helps her realize her dream of having the business turn a profit. reality The financial statement reinforced the reality that our business is in deep trouble. realistic The accountant needs realistic numbers on which to base his plan. transtate ‘The computer was able to translate data from the created spreadsheet into the spreadsheet program | prefer. translation The translation of the document was provided at no charge. translatable The data was not translatable between programs and had to be entered by hand, which took hours. ‘ype This type of business requires a lot of start-up money. typical Part of a category summary is defining the expenses that are typical of the business in question, typically ‘Typically, we finished preparing the budget justin time to meet the deadline,156 600 ESSENTIAL WORDS FOR THE TOEIC TEST WORD PRACTICE LISTENING COMPREHENSION ea Il Part 1 Photo Look at the picture and listen to the sentences. Choase the sentence that best describes the picture. 1@8®@00 Part 2 Question-Response Listen to the question and the three responses. Choose the response that best answers the question. 20806 3@G86 Part 3 Conversation Listen to the dlalogue. Then read each question and choose the best answer. 4, What is the woman doing? (A) Developing a project report. {B) Preparing a financial statement. (C) Making a weather forecast. (D) Writing an expense report. 5. When does she want to have this finished? (A) By noon. (8) Betore 8:00. (C) By the end of the week. (0) Before the end of the year. 6. What does the man offer to do? (A) Wie a check. (6) Sign a statement. (C) Solve her financial problems. (0) Correct her calculations. Part 4 Talk Listen to the talk. Then read each question and choose the best answer, 7. Who is this talk directed at? (A) Large companies. (8) Financial advisors. (C) Small business owners. (0) Finance companies. 8. When does a business typically become proftiabie? (A) During the first five years. (B) During the first year. (©) After five years. (0) After two years. 9. According to the speaker, what is the first step to take when starting a smali business? (A) Get an office with a key. (2) Write a financial statement. (©) Paise start-up funds. (D) Hire a project manager.LESSON 25: FINANCIAL STATEMENTS 187 READING Part 5 Incomplete Sentences Choose the word that best completes the sentence. 10. Before we begin, | think we should all focus on the 13. The projected finaneial statement demonstrated to outcome of this effort ‘Susan that her business had a chanoe (A) desirableness (C) desired of increasing its proft over the next two quarters. ®) desire (0) desirability {A) realistic (C) realistically (8) realist (0) reality 11, The accountant can review all the of the financial statement with you. 14. To create our financial strategy, our consultant took (A) detailed (C) details the experiences of similar businesses and (8) detailing (0) detail relevant outcomes to our situation. (A) translatable (C) translator 12. The __figures for the next quarter will (8) translation (0) translated not be available until a week from tomorrow. (A) project (©) projection 15. Our business experienced a fall in profits (®) projected (OD) projects during the third quarter of the year. (A) typical «C) type. (8) typically (0) typed Part 6 Text Completion To: Department Heads From: Roy Jones, Manager Re: Planning Meeting ‘As you know, our quattterly planning meeting will take place in two weeks. | want to let you know some of the topios that willbe discussed, to give you a chance to prepare. First, the overall economic situation in the country looks very good for the coming year, Economists _16 an increase in consumer spending, especially in our sector. Therefore, we should look into increasing production. believe that a 15 percent increase by the end of the year is a realistic target. ‘Second, since the company plans to increase sales overseas, we will need to hire several _17__. We will need to discuss how many we need and which languages should have priority. ‘These are the most important topics for the meeting. if anyone 18. to put a special item on the meeting agenda, please let me know by the beginning of next week. 16. (A) foreclose 18. (A) desire {B) forebode (8) desires (C) forego (C) will desire (0) forecast (0) have desired 17. (A) translators (8) translates (C) translations (0) transports158 600 ESSENTIAL WORDS FOR THE TOEIC TEST Part 7 Reading Comprehension Questions 19-23 refer to the following article and e-mail message. Do you have a sound financial plan for your small business? You should. The majority of small bust- nesses fail during tho first five yeu, typically because they have not made realistic financial plans. A new business ovmer may start out with the necessary funds, a qualified staff, and office space and equipment. These things may not save the business from disaster, however, if the business ‘owner hasnt set realistic targets and made plans to reach them. Everyone who contemplates starting a new business should sit down and write out all the details of a financial plan before doing anything else. 19. According to the article, why do most small businesses fail? (A) Lack of financial planning. {B) Lack of adequate office space. (©) Lack of qualified staf. {D) Lack of adequate funds. 20. Why did Matthew write the e-mail message? (A) He wants to start a small business with Shirley. (B) He is writing an article for a magazine. {C) He wants to make a financial pian. {D) He Is looking for new clients. 21. When does Matthew want to meet with Shirley? (A) Tomorrow. {B) Next week. {C) in six months. (0) Next year. ‘To: Shirley Flaines From: Matthew Rockwell Subject: Financial planning ‘Attach: Financial Plans for Small Businesses Sisley Have you seen the attached artiele on financial plan- ning? Tt appeared in this week’s issue of Small Business Owner magazine. It has given me a new perspective on things. I cant believe we have Boon running our busines for sx months, but we sti haven't sat down together to write out a financial pla. ‘Overall, I believe our business is doing well, and we certainly have enough clients. But, 1 now understand ‘hat our future success depends on having a good financial plan. We need to project our earnings for the nest year and set financial targets. We should get to ‘work on this right away. Can we moet tomorrow after: noon? Three o'clock is @ good time for me. Let me know soon. Matthew 23, ‘The word typically in line 3 of the article is closest in meaning to (A) unfortunately (8) usually (©) really (0) sadly The word perspective in line 4 of the e-mail is closest in meaning to {A information {B) advice (©) goal (0) viewWORD REVIEW #5 159 Word Review #5 Lessons 21-25 Financing and Budgeting Choose the word that best completes the sentence. 1 The Small Business Administration will help you to arrange to money to start a business. (A) borrow (8) borrowed (©) borrowing (0) borrower When we good terms. {A) take out (B) took out (©) taken out {D) taking out a loan, we found very Most people get nervous when someone is. their books. (A) audit (8) audits (C) audited (D) auditing ‘Sometimes itis dificut to investments. (A) pull up (8) pul out (C) pull at (0) pull to | preter funds. (A) invest (B) investment (C) investing (0) investor of bad in social-conscience 6. When the Dow is dropping, investors need to be (A) resource {) resources (C) resourceful (D) resourcefulness 7, Sometimes it is difficult to understand how the government tax liabibty, (A) caloulating (8) calculations (C) calculators (0) calculates, 8. One decision with tax retums is whether to itemizing in favor of the standard deduction, (A) give up () giving up (©) gave up (©) given up 9. The company's _ next six months were exciting. (A) project (B) projects (C) projection (0) projected earnings over the 10. Some parts of the tax code are so confusing that they need - (A) transiate (8) translates (C) translated {D) translation160 600 ESSENTIAL WORDS FOR THE TOEIC TEST Choose the one word or phrase that best completes each sentence. At Grover Investment Services, we understand that you work hard to earn your money, and it is important to invest it 11. This is where we come in. We offer our 12 _ a full range of investment services. Whether you are a con- servative or aggressive investor, we can help you develop an investment plan that suits your needs. At Grover, we are _19._ to helping you get the best possible return for your money. Call us today, 11. (A) wise 19. (A) commit (B) wisely (8) committee (©) wizened (C) committed (0) wisdom (0) commitment 12, (A) accountants (©) officers {C) spouses (0) clients First-time home buyers may feel overwhelmed by the process of applying for a mortgage. However, the process of 14 money to buy a house is not very complicated. First, you will have to fil aut a form giving information about ‘your financial situation. You need to show that you have a good income. It is also important not to have a lot of _15_. If you already owe a lot of money, the bank may hesitate to lend you more. Then, you will have to make ‘@_16_,, usually about 10 percent of the total price of the house. The bank lends you the rest of the money for the purchase. 14. (A) borow 16. (A) refund (8) borrows (8) target (©) borrowed (C) down payment (0) borrowing (D) forecast 15. (A) debut (@) debt (C) doubt (0) dubbed Many people use the services of an accountant to help _17 __ their tax forms. They consider it well worth the money. ‘An accountant can help you avoid 18 _ for underpayment of taxes and, in general, ensure that your tax formn has been filled out correctly. But remember, accountants have deadlines too, Be sure to give all your tax information to your accountant early, then you can be sue that your taxes will be ready to 19 _ on time, No one wants to pay a fine for sending in their tax form too late. 17. (A) prepare 19. (A) file (6) preparer (8) fund (C) preparation (©) budget (0) preparatory (0) invest 18. (A) pennants (8) penatios (©) penitents (0) pendants