University of Mercu Buana, Jakarta

MODULE 12

UNIVERSITY OF MERCU BUANA, JAKARTA

Reading:

The Balance Sheet

Financial statements are the final product of the accounting process. They provide information o the financial condition of a company. The balance sheet, one type of financial statement, provide a summary of what a company owns and what it owes on one particular day.

Assets represent everything of value that is owned by a business, such as property, equipment, and account receivable. On the other hand, liabilities are the debts owed by a company – for example, to suppliers and banks. If liabilities are subtracted from assets (assets – liabilities), the amount remaining is the owners’ share of a business. This is known as owners’ or stockholders’ equity.

One key to understanding the accounting transactions of a business is to understand the relationship of its assets, liabilities, and owners’ equity. This is often represented by the fundamental accounting equation: assets equal liabilities plus owners’ equity.

ASSETS = LIABILITIES + OWNERS’ EQUITY

These three factors are expressed in monetary terms and therefore are limited to items that can be given a monetary value. The accounting equation always remains in balance: in other words, one side must equal the other.

The balance sheet expands the accounting equation by providing more information about the assets, liabilities, and owners’ equity of a company at a specific time (for example, on December 31, 2007). It is made up of two parts. The first part lists the company assets, and the second part details liabilities and owners’ equity. Assets are divided into current and fixed assets. Cash, account receivable, and inventories are all current assets. Property, buildings, and equipment make up the fixed assets of a company. The liabilities section of the balance sheet is often divided into current liabilities (such as accounts payable and income taxes payable) and long-term liabilities (such as bonds and long-term notes).

The balance sheet provides a financial picture of a company on a particular date, and for this reason it is useful in two important areas. Internally, the balance sheet provides managers with financial information for company decision-making. Externally, it gives potential investors data for evaluation of the company’s financial position.

I. Categories of the balance sheet can be classified to show the relationship between them. Fill in the blanks below based on the information provided in the reading and in Figure 1 below:

Class: AssetsClass: Liabilities

Members: Current assetsmembers: ………………………

………………….. ……………………….

Class: Current assetsClass: ………………………….

Members: ………………………Members: account payable

………………………. ……………………………

………………………

Class: ………………………Class: long-term liabilities

Members: ………………………Members: ………………………..

………………………. ………………………..

equipment

II. Complete the balance sheet by writing the correct terms from the list below: (figure 1)

assetscurrent liabilitieslong-term liabilities

liabilitiesfixed assetscurrent assetsstockholders’ equity

International Manufacturing, Inc.

Balance Sheet

December 31,2007

Figure 1

II. INFORMATION TRANSFER:

Miles Laboratoories, Inc, year Ended December 31, 2007

Balance Sheet (all figures in millions)

AssetsLiabilities

Current AssetsCurrent Liabilities

Cash$ 8,814.000Bank Loans$ 38,242,000

Account receivable$ 59,711,000Accounts payable$ 39,745,000

Inventories$ 68,597,000Taxes on Income$ 5,613,000

Other$ 11,901,000Current Portion of

______Long-term Debt$ 21,423,000

Total Current Assets$ 149,023,000Total Current Liabilities$ 105,023,000

Investments$ 14,173,000

Fixed AssetsLong-term Debt$ 85,864,000

Buildings$ 81,920,000Deferred Income Tax$ 6,587,000

Machinery& Equipment$ 85,882,000Other$ 573,000

Less Depreciation$ 70,025,000Shareholders’ equity

Land$ 7,474,000Preferred Stock, non

Construction in progress$ 9,871,000 issued

Total Fixed Assets$ 115,112,000Common Stock$ 10,721,000

Other AssetsCapital in Excess of

Goodwill & Trademark$ 53,910,000Par Value of Stock$ 39,640,000

Patents& Processes$ 1,515,000Retained Earnings$ 87,777,000

Other$ 1,021,000Less Cost of Common

Total Assets$ 334,764,000Stock Held in Treasury$ 1,421,000

Total Shareholders’

Equity$ 136,717,000 Total Liabilities and

Shareholders’ Equity$ 334,764,000

Figure 2

Scan Figure 2 to answer the questions below:

1. What is the long-term debt for Miles Laboratories, Inc.?
2. How much are the total current assets of this company?...... The total fixed assets?...... The total assets?......
3. Which current liability equals $ 5,613,000?
4. Which type of asset is the highest current asset?

Refer to Figure 2 to answer the questions below:

1. There is no total given for long-term liabilities in this balance sheet. Which three categories should be added together to get this total?

What are the total long-term liabilities?

1. What is the accounting equation for Miles Laboratories, Inc. on December 31, 2007? (Assets = Liabilities + Owners’ Equity)

…………………. = …………………….. + ……………………

1. If Miles Laboratories, Inc. sells $ 50,000 in stock in order to raise capital for a new warehouse, which figures I n the balance sheet must be changed?

1. Which one of the items listed under shareholders’ equity must be subtracted from the total shareholders’ equity rather than added to it?

Grammar Exercises:

Please try to do this tenses exercise in multiple choice form:

QUESTIONS:
Fill in each blank with the best response

1. If he doesn't come in the next 10 minutes, we ______without him. (answer: will start)
   started
   would start
   will start
   
2. He ______a manager when he was 25. (answer: became)
   has become
   became
   was becoming

See the difference between the two tenses:

He became a manager when he was 25. (ada keterangan waktu tertentu – particular time)

He has become a manager since he was 25. (waktu berjalan bukan suatu wkt tertentu)

1. ______the details of the proposed merger. (answer: Let’s discuss)
   Let's to discuss
   Let's discuss
   Let's be discussing
   4. Our distributor called while I ______to Jim. (I'm no longer talking to Jim). (answer: was talking)
   was talking
   have been talking
   would be talking
   5. I thought about your proposal, and I think we ______it.

(answer: will accept)
accept
will have accepted
will accept
6. How long ______in sales? (answer: B or C, both answer are possible)
B or C
have you worked
have you been working
7. I have ______your proposal, and I'm quite impressed.

(answer: reviewed)
reviewed
reviewing
review
8. The mayor failed ______the striking workers to return to contract talks. (answer: to persuade)
persuade
A or C
to persuade
9. The union ______on Tuesday to resume contract talks.

(answer: agreed)
was being agreed to
agreed
has been agreeing
10. Negotiations ______to continue into the weekend.

(answer: are expected – passive sentence)
are expected
are expecting
expect

1. ______a strike, the company gave in to the workers' demands. (answer: Hoping to prevent – gerund functions as subject)
   Hoping to prevent
   Hoped to prevent
   Hope to prevent

1. . Our employees ______our strongest asset.

(answer: are)
are being
are
to be

1. ______that for another meeting. (answer: Let’s leave)
   Let's to leave
   Let's be leaving
   Let's leave

1. Our office usually ______at 5:00 PM, but today we're staying open until 6. (answer: closes)
   closes
   is closing
   closed

1. ______business in third-world countries can be a frustrating experience. (answer: To do or doing, both are possible)
   To do
   Having done
   Doing

1. Please ask Robert ______to the meeting. (answer: to come)
   to be coming
   to come
   come

1. By the time my boss gets here, I ______my report.

(answer: will have finished)
will have finished
would be finished
finish

1. From now on, we ______things differently.

(answer: A or C are possible)
will be doing
A or C
will do

1. If he had told me about this earlier, I ______someone else.

(answer: would have hired – conditional sentence type 3)
will have hired
would have hired
will hire

1. I ______those changes last week.

(answer: implemented – simple past)
have implemented
have been implementing
implemented

1. Over that past three years, I ______in a number of interesting projects. (answer: have been involved)
   have been involved
   A or C
   was involved

1. . Right now I ______in any project.

(answer: A or C are possible)
am not being involved
A or C
am not involved

1. PERSON 1: Do you have time to talk?

PERSON 2: Not really, I ______pretty busy right now.

(answer: am)
am being
am
have been
24. I ______to a trade fair until I went to the one in Las Vegas last month. (answer: had never been – lebih lampau dr until I went)
had never been
was never
have never been
25. They were one of our biggest competitors, but they ______

bankrupt last year. (answer: went)
went
have gone
had gone

SKILL 12 : USE ADJECTIVE CLAUSE CONNECTOR/SUBJECT CORRECTLY

In skill 11we saw the adjective clause connectors were used to introduce clauses that describe nouns. In skill 12 we will see that in some cases an adjective clause connector is not just a connector; an adjective clause connector can also be the subject of the clause at the same time.

PAGE 223

223STRUCTUR QUESTIONS (Paper and Computer)

The womanis filling the glass thatis on the table.

ADJECTIVE CLAUSE

The glassthatis on the table contains milk.

ADJECTIVE CLAUSE

In the first example there are two clauses: woman is the subject of the verb is filling, and that is the subject of the verb is. These two clauses are joined with the connector that. Notice that in this example the word that serves two functions at the same time: it is the subject of the verb is, and it is connector that joins the two clauses. The adjective clause that is on the table describes the noun glass.

In the second example, there are also two clauses: glass is the subject of the verb contains, and that is the subject of the verb is. In this example that also serves two functions: it is the subject of the verb is, and it is the connector that joins two clauses. Because that is on the table is an adjective clause describing the noun glass, it directly follows glass.

The following example shows how these sentence patterns could be tested in structure questions on the TOEFL test.

In this example you should notice immediately that the sentence has two verbs, is and has, and each of them needs a subject. You know that table is not a subject because it follows the preposition on; table is the object of preposition. The only answer that has two subjects is answer (B), so answer (B) is the correct answer. The correct sentence should say: The notebook which is on the table has four sections. In this sentence notebook is the subject of the verb has, and which is the subject of the verb is. Which is also the connector that joins the two clauses.

The following chart lists the adjective clause connector/ subjects and the sentence patterns used with them:

PAGE 224

224 STRUCTURE

EXERSICE 12: Each the following sentence contains more than one clause. Underline the subjects once and the verbs twice. Circle the connectors. Put boxes around the adjective clauses. Then indicate if the sentences are correct (C) or incorrect (I).

C 1. The ice creamthatis served in the restaurant has smooth,

creamy texture.

I 2. The carsare trying to enter the freeway system are lined up for blocks.

1. I have great respect for everyone who on the Dean’s List.

1. It is going to be very difficult to work with the man which just began working here.

1. The door that leads to the vault it was tightly locked.

1. The neighbors reported the man who was trying to break into the car to the police.

1. These plants can only survive in an environment is extremely humid.

1. The boss meets with any production workers who they have surpassed their quotas.

1. The salesclerk ran after the woman who had left her credit card in the store.

1. The shoes which matched the dress that was on sale.

Daftar Pustaka

1. David Catton, David Falvey, and Simon Kent, MARKET LEADER, Course Book, Pre-Intermediate Business English, 2002, Edinburg Gate, Harlow, Essex, CM 2JE, England.

1. Betty Schrampfer Azar, Understanding and Using English Grammar, Second Edition, Prentice Hall Regents, Englewood Cliffs, New Jersey 07632, 1989, United States of America.

1. Debora Philips, PREPARATION COURSE for the TOEFL TEST, The Paper Test, Pearson Longman, Pearson Education, 2003, United States of America.