C. Discuss the questions with your partner.

1) What are assets? Who supplies them? What assets are called nonphysical?

2) What do liabilities include?

3) What is capital?

4) What does owners’ equity represent?

5) What is the owners’ equity of a corporation? What parts does it consist of? What do these parts represent?

6) Under what circumstances is the company considered to be successful?

7) What are net income and net loss?

8) What shows the profitability of a company in the financial statement?

Reading 3: The Classified Balance Sheet

A. Study the topical vocabulary.

accounting period	отчетный период, финансовый год
classified balance sheet	классифицированный баланс
current assets	краткосрочные активы, оборотный фонд, ликвидные средства
current liabilities	текущая задолженность, краткосрочная
fixed assets	основные активы
franchise	исключительное право использования торговой марки, монопольное право
intangible assets	неосязаемые активы
liquidity	оборотные средства, ликвидность
long-term liabilities	долгосрочные обязательства (ответственность)
mortgages payable	ипотека, подлежащая погашению; закладные к оплате
non-current tangible assets	малоценные внеоборотные материальные активы
notes payable	дебиторская задолженность, векселя к платежу, счета к оплате
payable	cчета к оплате
property	собственность, имущество
receivable	дебиторская задолженность к получению, неоплаченный, счета дебиторов
salaries payable	задолженность по заработной плате
stock	облигация, ценные бумаги
tangible assets	материальные активы
taxes payable	задолженность по налогам; налог, подлежащий к уплате

B. Read the text.

Classifying assets. Assets may be grouped according to the degree of liquidity or the expected conversions to cash or the time it takes to use up the assets. For analytical purposes, assets are classified as follows:

Current assets are cash and other assets that can reasonably be expected to be converted to cash, used up, or sold within 1 year or less. Thus, on the classified balance sheet, current assets are listed first, based on their relative degrees of liquidity. Examples of current assets include supplies, insurance, and accounts receivable.

Investments may be either short- or long-term assets depending on the nature of the investments. Generally, bonds are considered long-term investments, whereas stocks may be either long-or short-term investments. Investments generally appear immediately following current assets on the classified balance sheet.

Property, plant and equipment are tangible, long-term assets; they are used in the continuing operations of the business and are expected to have useful lives of more than 1 year. They are also known as plant assets or fixed assets.

Intangible assets are usually long-term in nature and are traditionally shown on the classified balance sheet after plant assets. They lack physical substance and in some cases represent a right granted by a government (patent) or another company (franchise).

Classifying liabilities. Liabilities are classified in a similar manner. Liabilities are considered to be current liabilities if the obligation is to be settled within 1 year or within the current accounting period. These debts are usually settled with the payment of current assets. Examples of current liabilities are accounts payable, taxes payable, salaries payable, and notes payable.

Following current liabilities on the balance sheet are long-term liabilities, which are usually payable in more than a year. Examples of long-term liabilities include bonds payable and mortgages payable. In the year in which a long-term liabilities becomes payable, it is usually converted to a current liability.