Vocabulary to the text

American Accounting Association – Американская ассоциация бухгалтерского учета (организация бухгалтеров, преподавателей бухгалтерского учета и научных работников, заинтересованных в развитии теории и практики бухгалтерского учета)

assertion – утверждение, отстаивание (прав, претензий)

haphazard – 1) случайный; 2) бессистемный

to embody – 1) воплощать в жизнь, олицетворять, заключать в себе, содержать; 2) объединяться, сливаться (в акционерное общество)

generally accepted accounting principles (GAAP) – общепринятые принципы бухгалтерского учета (ГААП, ОПБУ); в широком смысле: принципы ведения финансового учета и представления отчетности, которые на данный момент времени признаются базой для составления отчетности, корректно отражающей экономическое положение фирмы

audit report – отчет о результатах аудита (более детальный отчет, чем заключение аудитора; представляется руководству или совету директоров вместо или вместе с сокращенным аудиторским заключением)

Text 3 The assets, liabilities and equity

Accounting is the process of measuring and recording the financial value of the assets and liabilities of a business and monitoring these values as they change with the passage of time. When we refer to a business we could be referring to an individual, a company or any other entity for which accounting records are to be kept (for example a church, club or other non-profit organization).

The assets of a business are those things that belong to the business that have a positive financial value i.e. items that could be sold by the business in exchange for money. Examples of assets include land, buildings, vehicles, stock, equipment, rare gold coins, bank accounts with positive balances and money owed to the business by its debtors.

The liabilities of a business are those things that belong to the business but unlike assets have a negative financial value i.e. items that will require the payment of money by the business at some point in the future. Examples of liabilities include unpaid bills, unpaid taxes, unpaid wages, rusty motor vehicles, stock that has passed its use-by date, overdrawn bank accounts and money owed by the business to its creditors.

The equity of a business is defined as the value of the assets minus the value of the liabilities. In other words the equity is the financial value that would be left if all the assets were sold and the money from the sale was used to pay off all the liabilities. Another way of expressing this is to say that the equity is the amount of money that would be released if the business was to be wound up.

The assets, liabilities and equity of a business are all financial measurements that relate to a particular point in time. The financial statement that is used to present this information is known as the balance sheet. The balance sheet is a statement of the assets, liabilities and equity of a business as they exist at a particular point in time.

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