Balance sheets

0 Before you read the passage, talk about

these questions.
Income statements show financial information over a 1 What information goes on a balance sheet?
period of time. Balance sheets, on the other hand, show
2 How do companies use balance sheets?
a company's financial status at a certain moment in time.
Let me show you how to read them.
Balance sheets follow this equation: Reading
f.) Read the balance sheet and magazine

Assets = liobililies + Owner's Equity article. Then, choose the correct answers.
1 What is the passage mainly about?
It's that simple. Assets are what a company owns. A tracking accounts payable and debts
Liabilities are what a company owes. Equity is what a B calculating the total value of a company
company is worth. C explaining the information on a balance sheet

Assets include cash, inventory, accounts receivable, D understanding the effect liabilities have on
and fixed assets like land and property. Liabilities equity
include accounts payable and debts. Owner's equity is 2 Which of the following is NOT an asset?
the total value of the company.
A land C inventory
The sum of the assets should be equal to the sum of B equity D accounts receivable
the liabilities plus the owner's equity.
3 What is true according to the passage?
A Equity is what a company owns.
As of
July 31st, 2011 B Cash and inventory are fixed assets.
Ba\ance Sheet I ;
C Accounts payable are considered debt.
Liab\\ities D Total assets equal total liabilities and equity.
t Assets
- /\ccounts 11,000
cash (bank 10,000 Payable - Vocabulary
account)
@Q_ E) Match the words (1-5) with the definitions
/\ccounts Oebts
15,000 - (A-E).
Receivable
- lotal ~ 1 _ balance sheet 4 _asset
Inventory 5,000 Liabilities
2 _ owner's equity 5 _ liability
-
Fixed owner's E.qui\Y
~ 3 _ accounts receivable
/\Ssets -
~
- l otal Equity - A what a company is worth
lotal B something a company owns
Liabilities and ~ C a record of money that is owed to a company
lotal ~ Equity J for past sales
Msets
I D an amount of money that a company owes
E a document showing assets, liabilities, and equity
18
() Fill in the blanks with the correct words Speaking
and phrases from the word bank.
0 With a partner, act out the roles below

~accounts payable
BANK

fixed assets
based on Task 7. Then switch roles.
USE LANGUAGE SUCH AS:
sum inventory debt Excuse me, but ...
I was looking at our balance sheet ...
1 The company records most purchases in
We need to ...

2 Companies with too much _ _ _ __

can't get loans.
Student A: You are an accountant. Talk to
3 is getting low. Fill out a new
Student B about:
purchase order.
• a balance sheet
4 Add those figures. Then tell me what the
_ _ _ _ _ is. • low/high figures

5 The company has a lot of _ _ _ ____, • what to do about it

including a new warehouse.
Student B: You are an accountant. Answer
0 " Listen and read the balance sheet and
Student A's questions.
article again. What is meant by the term
fixed assets?
Writing
Listening 0 Use the conversation from Task 8 to fill
out the balance sheet.
0 " Listen to a conversation between two
accountants. Mark the following
statements as true (T) or false (F).
1 _ The man suggests taking on more debt. As of
2 _ The company has enough cash to pay its
Balance Sheet August 31st, 2011
debt. Assets Liabilities
3 _ The woman says there is an error on the
Cash (bank Accounts
balance sheet.
account)
Accounts
0 " Listen again and complete the
conversation.
Total
Inventory 10,000
A 1: 1 _ _ _____, but we have a problem. Liabilities
Fixed
A 2: What's that?
Assets
Owner's Equity
A 1: I was looking at this month's balance sheet.
Our accounts payable shows that we Total Equity
2 - - $15,000. Total
A 2: Why is that a problem?
Total
Liabilities and
Assets
A 1: Well, we 3 _ _ have $10,000 in the bank. Equity
A 2: I see. We have to 4 _ _ some money to
pay the difference.
A 1: Isn't it a 5 _ _ _ _ to take on more debt?
A 2: No. Our accounts receivable shows $15,000.
We can use that to 6 _ _ _ _ some
debt next month.