Economic English Vocabulary

What is the term used for the process of examining financial records to ensure their accuracy?

• scrutiny

• audit

• inspection

• review

Define 'depreciation' in the context of accounting.

• Depreciation is the increase in value of an asset over time

• Depreciation is only applicable to intangible assets

• Depreciation is the process of writing off all asset costs immediately

• Depreciation in accounting is the allocation of the cost of a tangible asset over its useful life.

Explain the difference between 'liabilities' and 'assets' in accounting.

• Liabilities are resources owned by the company, while assets are debts or obligations.

• Liabilities are profits, while assets are losses.

• Liabilities are expenses, while assets are revenues.

• Liabilities are debts or obligations, while assets are resources owned by the company.

What does the term 'balance sheet' refer to in accounting?

• A document detailing employee salaries

• A report on customer feedback

• A summary of monthly expenses

• A financial statement showing a company's assets, liabilities, and shareholders' equity at a specific point in time.

Define 'cash flow' in the context of financial statements.

• Cash flow is the total revenue generated by a business

• Cash flow is the value of assets owned by a business

• Cash flow is the movement of money into and out of a business, showing the actual cash generated or used during a specific period.

• Cash flow is the amount of physical cash held by a business at a given time

What is the meaning of 'audit' in accounting?

• Audit in accounting means conducting market research for a company

• An audit in accounting refers to the process of creating financial reports

• Audit in accounting is the act of managing employee payroll

• An audit in accounting is a systematic examination of an organization's financial records to ensure accuracy and compliance with laws and regulations.

Explain the term 'profit margin' in the context of business.

• Profit margin is the total revenue of a business.

• Profit margin is the percentage of revenue that exceeds the costs associated with generating that revenue.

• Profit margin is the amount of money left after all expenses are paid.

• Profit margin is the number of products sold by a business.

Define 'equity' in accounting terminology.

• The total assets of a business

• Owner's residual interest in the assets of a business after deducting liabilities.

• The amount of money invested in a business

• The revenue generated by a business

What is the significance of 'income statement' in financial reporting?

• The income statement is only relevant for internal use and not shared with external stakeholders.

• The income statement provides information on a company's employee salaries.

• The income statement is used to calculate taxes owed by a company.

• The income statement is significant in financial reporting because it helps stakeholders understand how well a company is performing in terms of generating profits.

Explain the concept of 'accrual accounting' in financial management.

• Accrual accounting recognizes revenues and expenses when they are earned or incurred, not when cash is exchanged.

• Accrual accounting is used primarily for personal finances.

• Accrual accounting is not a widely accepted financial practice.

• Accrual accounting only considers cash transactions.