2.Answer the questions :

1. What are the key components that form the content of the financial statements ?

2. What are assets ?

3. What are liabilities ?

4. What do drawings determine ?

5. What are tangible assets?

6. What do intangible assets represent?

7. What do drawings determine?

3.Make up questions of your own to find out as much information as possible about:

1. Expenses

2. Revenues

3. Capital

Text 12

1. Read and translate the text:

Auditing and accounts

Every year accounts of a limited company must be approved by auditors. They act on behalf of the shareholders. Their duty is to ensure that the directors are reporting correctly on the state of affairs of the company. They do not judge whether the directors are managing the company efficiently or not. That is something the shareholders must judge for themselves.

The Company Secretary is responsible for seeing that the books and records for the period in question are ready for checking. It could make a bad impression if the accounts department was not able to supply immediately any information wanted by the auditors.

What precisely do the auditors check? They have to be satisfied that everything which goes into making up the Profit Statement, the Balance Sheet and the Directors' Report is correct. The Profit Statement (sometimes called a Trading and Profit and Loss Account) shows how the profit for the year is arrived at. It starts with net sales or income, and deducts the cost of materials, work and overhead charges. This leaves a trading surplus, from which charges, such as depreciation on plant and buildings, auditors' fees, and administration and selling costs must be deducted to produce the net profit (or loss). The Balance Sheet is a summarized statement showing the amount of funds employed in the business and the sources from which these funds are derived. On one side is listed the capital employed, which usually consists of the issued share capital (акционерный капитал) plus reserves and retained earnings (нераспределенная прибыль). This starts with the total cost of its fixed assets ( land, buildings, and machinery) and any trade investments ( interests in other companies), followed by a break down of net current assets (that is, cash and stocks, plus what the firm is owed by its customers, less its liabilities, or what it owes to others). The totals on the two sides of the Balance Sheet must agree; that is, come to the same figure. The total dividend to be paid for the year is a current liability, and is therefore an item in the compilation of net current assets.

One of the most difficult jobs in preparing accounts is stock evaluation; that is, putting a value on all goods in the hands of the company. It may seem easy, as goods could be counted, and then the price paid for them could be checked against the suppliers' invoices. But the value of commodities often fluctuates. Furthermore, much of a company's stock will consist of work in progress or finished stock, and the volume of all stock is changing daily, if not hourly. The rule for stock valuation is that it should be taken at cost price or market price, whichever is the lower.

Notes to the text:

the profit statement – отчет о доходах, звіт про прибутки

overhead charges - накладные расходы, накладні витрати

trading surplus - торговые излишки, торговий надлишок

share capital - акционерный капитал, акціонерний капітал

reserved and retained earnings - сохраненная и нераспределенная прибыль, збережений та нерозподілений прибуток

current liabilities – текущие обязательства, короткострокові забов’язання