Finance English practice: Unit 11 — The Balance Sheet 1

Biz English

Apr 14, 2016

← back to Contents

Complete the sentences below. Use the key words if necessary.
- Assets, liabilities and capital
  
  key words
  balance sheets ○ assets ○ liabilities ○ capital ○ shareholders' equity ○ owed ○ suppliers ○ granting credit ○ assets equal liabilities plus capital
  
  Company law in Britain and the Securities and Exchange Commission in the US require companies to publish annual : statements for shareholders and creditors. The balance sheet is a document which has two halves. The total of both halves are always the same, so they balance. On half shows a business's , which are things owned by the company, such as factories and machines that will bring future economic benefits. The other half shows the company's , and its or .
  
  Liabilities are obligations to pay other organizations or people: money that the company , or will owe at a future date. These often include loans, taxes that will soon have to be paid, future pension payments to employees, and bills from : companies which provide raw materials or parts. If the suppliers have given the buyer a period of time before they have to pay for the goods, this is known as . Since assets are shown as debits (as the cash or capital account was debited to purchase them), and the total must correspond with the total sum of the credits - that is the liabilities and capital — .
  
  American and continental European companies usually put assets on the left and capital and liabilities on the right. In Britain, this was traditionally the other way round, but now most British companies use a vertical format, with assets at the top, and liabilities and capital below.
  
  Shareholders' equity
  
  key words
  share capital ○ retained earnings ○ distributed ○ the profit and loss account ○ cash flow statement
  
  Shareholders' equity consists of all the money belonging to shareholders. Part of this is — the money the company raises by selling its shares. But shareholders' equity also includes : profits from previous years that have not been — paid out to shareholders — as dividends. Shareholders' equity is the same as the company's net assets, or assets minus liabilities.
  
  A balance sheet does not show how much money a company has spent or received during a year. This information is given in other financial statements: and the .
British English or American English?
- balance sheet
  - British English
  - American English
- statement of financial position
  - American English
  - British English
- shareholders' equity
  - American English
  - British English
- stockholders' equity
  - American English
  - British English
Are the following statements true or false?
- British and American balance sheets show the same information, but arranged differently. clue
  — American and continental European companies usually put assets on the left and capital and liabilities on the right. Most British companies use a vertical format, with assets at the top, and liabilities and capital below.
  - false
  - true
- 2. The revenue of the company in the past year is shown on the balance sheet. clue
  — A balance sheet does not show much money a company has spent or received during a year.
  - true
  - false
- 3. The two sides or halves of a balance sheet always gave the same total. clue
  — Since assets are shown as debits and the total must correspond with the total sum of the credits assets equal liabilities plus capital.
  - true
  - false
- 4. The balance sheet gives information on how much money the company has received from sales of shares. clue
  — The balance sheet shows the company’s liabilities, and its capital or shareholder’s equity. Part of this is share capital – the money the company raised by selling its shares.
  - true
  - false
- 5. The assets total is always the same as the liabilities total. clue
  — Assets equal liabilities plus capital.
  - false
  - true
- 6. The balance sheet tells you how much money the company owes. clue
  — Liabilities are obligations to pay other organizations or people: money that the company owes, or will owe at a future date.
  - false
  - true
Complete the sentences.
- . . .
  Suppliers
  are companies that provide other companies with materials, components, etc.
  - Liabilities
  - Assets
  - Shareholders’ equity
  - Retained earnings
  - Suppliers
- . . .
  Retained earnings
  are profits that the company has not distributed to shareholders.
  - Retained earnings
  - Suppliers
  - Shareholders’ equity
  - Liabilities
  - Assets
- . . .
  Assets
  are things a company owns and uses in its business.
  - Assets
  - Retained earnings
  - Shareholders’ equity
  - Suppliers
  - Liabilities
- . . .
  Liabilities
  consist of everything a company owes.
  - Shareholders’ equity
  - Assets
  - Liabilities
  - Suppliers
  - Retained earnings
- . . .
  Shareholders’ equity
  consists of money belonging to a company's owners.
  - Suppliers
  - Liabilities
  - Shareholders’ equity
  - Assets
  - Retained earnings
Use the word combinations from the box to complete the sentences.
- box
  retain ○ earnings ○ distribute ○ profits ○ owe money ○ grant ○ credit ○ liabilities ○ pay
  
  We a lot of our because we don't any of our to the shareholders.
- Most businesses have customers who , because they them 30 or 60 days' .
- We have a lot of that we'll have to later this year.

Back

Privacy Policy Terms of Use Contact Us About Help