Vocabulary:

Britain's accounting watch­dog – орган, занимающийся регулированием деятельности профессиональных бухгалтеров и аудиторов Великобритании

hold sway - управлять, руководить

idle threat - пустая угроза

pickle - неприятное положение; плачевное состояние; сложная ситуация

Everyone has his own fix for this mess – Каждый предлагает свое решение данной проблемы.

cut corners – изворачиваться, идти в обход правил

second-tier accounting firms – аудиторские компании, не являющиеся лидерами

VOCABULARY CHECK

1. Бухгалтерский учет - система сбора и обработки финансовой информации об экономическом субъекте, дающая возможность делать выводы о финансовом положении организации и принимать экономические решения.

2. Cистема двойной записи - это система учета, в соответствии с которой каждая операция отражается одновременно по дебету одного и кредиту другого бухгалтерского счета.

3. Управленческий учет необходим для принятия управленческих решений.

4. Система учета по себестоимости, которая отражает активы по цене приобретения за вычетом накопленных амортизационных отчислений, является наиболее распространенной системой составления бухгалтерской отчетности.

5. Годовой отчет обычно включает в себя три финансовых отчета.

6. Со временем машины и оборудование теряют стоимость в результате изнашивания или устаревания. Этот процесс называется амортизацией.

7. Отчисления на амортизацию отражаются в финансовой отчетности. Стоимость оборудования списывается постепенно каждый год.

8. Остаточная балансовая стоимость представляет собой первоначальную стоимость актива за вычетом накопленной амортизации.

Section 2 the balance sheet

LEAD-IN

In accordance with the principle of double-entry bookkeeping, the basic accounting equation is

Assets = Liabilities + Shareholders’ (or Owners’) Equity.

This means that assets, or the means used to operate the company, are balanced by a company's financial obligations along with the equity investment brought into the company and its retained earnings.

An asset is something that has value, or the power to earn money.

Current assets have a life span of one year or less, meaning they can be converted easily into cash. These include: money in the bank, investments that can easily be turned into money, money that customers owe (accounts receivable), stocks of goods that are going to be sold (inventory). Fixed, or non-current assets, are those assets that are not turned into cash easily, expected to be turned into cash within a year and/or have a life-span of over a year. They can refer to tangible assets such as machinery, computers, buildings and land. Non-current assets also can be intangible assets, such as goodwill, which is a company’s good reputation with existing customers, patents or copyright. While these assets are not physical in nature, they are often the resources that can make or break a company - the value of a brand name, for instance, should not be underestimated.

On the other side of the balance sheet are the liabilities. These are the financial obligations a company owes to outside parties. Debts that have to be paid within a year are current (short-term) liabilities. They include accrued and accumulated expenses that have not yet been paid such as taxes and interest. Long-term liabilities, for example bank loans and bonds, are payable in more than a year.

Shareholders' equity comes from two main sources. The first and original source is the money that was originally invested in the company, along with any additional investments made thereafter. The second comes from retained earnings which the company is able to accumulate over time through its operations. In most cases, the retained earnings portion is the largest component.

Shareholders' equity represents a company's total net worth. In order for the balance sheet to balance, total assets on one side have to equal total liabilities plus shareholders' equity on the other.

The balance sheet, along with the profit and loss account and cash flow statement, is an important tool for investors to gain insight into a company and its operations. The balance sheet is a snapshot at a single point in time of the company’s accounts - covering its assets, liabilities and shareholders’ equity. The purpose of the balance sheet is to give users an idea of the company’s financial position along with displaying what the company owns and owes. It is important that all investors know how to use, analyze and read one.

Below is an example of a balance sheet: