The balance sheet

Managers will be primarily concerned with two accounting documents - the balance sheet and the profit and loss account.

The balance sheet is a summary of the firm's assets, liabilities and capital as at a given date. There are a number of ways in which it can be set out. The conventional way is to list the assets on the right-hand side of the document, and the liabilities and capital on the left. Bear in mind that assets less the liabilities will always give the capital (that is, the 'capital invested' using the definitions above). This means that assets equal liabilities plus capital.

However, this old practice is changing and an increasing number of firms are showing the sides reversed. Companies normally present the data in 'statement' form showing liabilities as a deduction from assets, to give the capital.

Profit and loss account

The profit and loss account (usually abbreviated to P & L) shows how the profit (or loss) was made. It covers a period, and this is reflected in the title for the document. Notice the different nature of the items listed They are descriptions of either how the money was earned, or of how the money was spent. The items do not have a continuing material existence of their own. The first part of a P & L, showing the 'gross' profit, is sometimes called a trading account (or trading section of the P & L).

b) Find in the text definitions of the main terms and translate them into Russian.

c) Find in the text the passage describing the profit and loss account and read it aloud. (The approximate time of reading is 1 minute.)

d) Write a summary of the text in English.

<== попередня сторінка	\|	наступна сторінка ==>
What are 'liabilities'?	\|	A) Skim the text, trying to understand what it is about. It is good if you can read it for 00 minutes (90 words per minute).

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