2.Complete the following statements:

1. The types of accounting reports rendered may______.

2. The accounts to be used in the ledgers should be ______.

3. The ledger information on past activities should _____ .

4. Data recorded in the journals are posted _____ .

5. General ledger accounts do not _____.

Text 11

1. Read and translate the text:

Key components of financial statements

What are the key components of financial statements ?

Assets are defined as future economic benefits owned or controlled by a particular entity as a result of past transactions or events. Assets are things of value used by the business in its operations. Thus, they are the economic resources used in carrying out such activities as production, consumption, and exchange. The common characteristics possessed by all assets is "service potential" or "future economic benefits", that is, the capacity to provide future services or benefits to the entities that use them. In a business enterprise, that service potential or future economic benefit eventually results in cash inflows to the enterprise.

Liabilities are obligations arising from past transactions of the entity to transfer assets or services to other entities or individuals in the future. To put it more simply, liabilities are existing debts and obligations.

Owner's Equity

The assets of a business are supplied or claims by either creditors or owners. Liabilities are creditors' claims whereas owner's ownership claim on total assets is known as owner's equity; it is equal to total assets minus total liabilities. The equity is the owner's claim on the assets of the business.

Capital

Capital is the term used to describe the owner's permanent investment in the business. When an investment is made in the business, capital is increased. It follows that owner's equity increases as well.

Drawings

An owner can withdraw cash or other assets during the accounting period for personal use. These withdrawals could directly decrease capital. However, it is generally considered preferable to use a separate classification referred to as drawings to determine the total withdrawals for the accounting period. Drawings decrease total owner's equity.

Revenues

Revenues are the gross increase in owner's equity resulting from business activities entered into for the purpose of earning income. Revenues result from the sale of merchandise, the performance of service; the rental of property, and the lending of money. Revenues may take the form of an increase in an asset of a decrease in a liability, may arise from different sources, and are identified by various names depending on the nature of the business.

Expenses are the cost of assets or services used in the process of earning revenue. Expenses are the decreases in owner's equity that results from operating the business. Expenses represent actual or expected cash outflows. Expenses take many forms and are identified by various names depending on the type of asset consumed or service used.

Notes to the text:

permanent investment - долгосрочная инвестиция, довгострокова інвестиція

actual and expected cash outflow - действительный и ожидаемый отлив наличности, дійсний та очікуваний готівковий відплив

benefits owned or controlled – собственная и контролируемая прибыль, прибуток, яким володіють та контролюють