Exercises

I. Find in the text Ukrainian equivalents to the following words and word combinations and translate the sentences in which they are used.

Liquidity; marketable securities; temporary investments of excess cash; receivables; allowance for doubtful accounts; promissory notes; accumulated depreciation; the process of apportioning; to allot to each year; current liabilities; earning capacity; notes payable; salaries payable; taxes payable; mortgage payable.

II. Find in the text English equivalents to the following words and word combinations. Make sentences of your own with these phrases.

Балансове рівняння; власний капітал; що півроку; щоквартально; роздрібний продавець; обертати на готівку; найбільш ліквідний актив; за лічені дні; видача торгового кредиту; товарні запаси (складські запаси); страхові внески; забезпечений простим векселем; іпотечний кредит; нерозподілений прибуток; номінальна вартість; випущені акції (на руках у акціонерів).

III. Answer the following questions.

1. What is the purpose of a Balance Sheet? What kind of information does this statement provide?

2. What is the composition of a balance sheet?

3. Why are the total assets shown on a balance sheet always equal to the total of the liabilities and the total equity?

4. What are the major classification of (a) assets, (b) liabilities, and (c) owners’ equity?

5. How are current assets distinguished from fixed assets? Give two examples of each.

6. Why are fixed assets depreciated on a balance sheet?

IV. What kind of assets is each of the following? Which three are not assets? Explain your choice.

1. Vans which a delivery company owns and uses to deliver goods.

2. Vans for sale in a showroom.

3. A showroom owned by a company that sells vans.

4. A showroom rented by a company that sells cars.

5. Money which customers owe, that will definitely be paid in the next 60 days.

6. Money which a bankrupt customer owes, that will certainly never be paid.

7. The client list of a successful training company, all of which are successful businesses.

8. The client list of a training company, with names of clients that have all gone bankrupt.

V. Accountants use different terms to denote the same notions. Match these accounting terms with the definitions below and translate them into English.

current or floating or circulating assets

fixed or capital or permanent assets

Intangible assets

liquid or available assets

net assets

net current assets or working capital

wasting assets

1. ______ are anything that can quickly be turned into cash.

2. ______ are the excess of current assets (such as cash, inventories, debtors) over current liabilities (creditors, overdrafts, etc.).

3. ______ are those which are gradually exhausted (used up) in production and cannot be replaced.

4. ______ are those which will be consumed or turned into cash in the ordinary course of business.

5. ______ are those whose value can only be quantified or turned into cash with difficulty, such as goodwill, patents, copyrights and trade marks.

6. ______, or shareholders’ equity, on a business’s balance sheet, is assets minus liabilities (which is generally equal to fixed assets plus the difference between current assets and current liabilities).

7. ______, such as land, buildings and machines, cannot be sold or turned into cash, as they are required for making and selling the firm’s product.