I. Read what different people say about financial statements and fill in the gaps with the words which are given below

Financial situation, point, exactly, creditors, interpreted, profitable, count up, themselves, rely on, take responsibility, got a clue, picture, find out, sources, trained, stuff, fuss.

Accountant: The financial statements of a company are the most important documents that a company produces. Investors, _____, banks, customers – everybody reads the statements. The accounts show what a company does with its money, how _____ it is, and also how risk-worthy it is. And you can see warning signs for the future. Our stock exchanges depend on properly prepared accounts.

Trader: I agree that the accounts of the companies have a lot of information, but it’s very hard to understand it all. In my job, I need to know the _____ _____ of a company. People interested in the stock exchanges _____ _____ experts like me. But there also many other _____ of information. As for the accounting rules, they don’t interest me, or anyone else, at all. That’s _____ for the accountants.

Investor: All those numbers, and I haven’t _____ _ _____, what they all mean. Pages and pages of them, and apparently they are often only “estimates”, or they can be _____ in one of many ways. What’s the _____ when the accountants _____ can’t agree on how to show the numbers? Most of us need a lot more information and knowledge about a company than what we get in the accounts.

Layman:Is it all ready that hard? Can’t we just look at the profit or loss of the company to _____ _____ how it’s doing? I don’t see all the _____. Accountants are there to tell us about the numbers, and I thought that’s what they do. They are _____ to report these numbers, and it can’t be that hard to _____ _____ everything that’s happened.

Managing Director: This is _____ the problem. There are many ways to change the numbers to give a better _____. Some of my peers have been guilty of doing just that. The accountants and auditors have to _____ _____ for the way that numbers are reported. Accountants and their work are extremely important, they just need to make it all a little easier to understand.

Which comments do you agree with? How would you respond to the people you don’t agree with?

II. Which do you think are the two or three most important financial ratios? Why?

CHAPTER IV

AUDITING