Current liabilities

Payments which will have to be made in the current financial year include provision for repayments of debts expected to mature and other expenses such as tax, bank overdrafts and creditors. There is no conventional order for the presentation of current liabilities.

2.Comprehension check.

1. Use the chart and without looking into the text:

a) define the words:

· current assets

· liquid assets

· illiquid assets

Assets

b) distinguish between current and fixed assets.

2. Here are some answers about assets of a company. Write the questions.

a) What ______________?

Assets are the resources owned by a business

b) How_______________?

Liquid asset is the asset which is easily turned into cash without loss of value whilst illiquid asset is the one which is difficult to turn into cash without loss of value.

c) Why_______________?

Fixed assets are normally those which the business intends to hold for more than one year and which are not intended for resale.

d) What___________________?

Both patents and copyright attempt to protect the originators of an idea from exploitation by other people.

e) In what way______________?

Current assets are those which are used up in the day – to – day operations of a business and which can be converted into cash faster and without potential loss of value.

f) What____________________?

Current assets include stock, debtors and prepayments, cash at bank and cash in hand.

g) Which___________________?

Money lent to the business and also money invested in the business by the owners.

h) When____________________?

Current liabilities payments are to be made in the current financial year.

Discussion

Work in small groups.

Define a patent and discuss why patents, goodwill and trademarks are considered assets of a business.

Reading

1.Read text 9 using your dictionary to help with new words.

TEXT 9

Balance sheet

A balance sheet is the financial statement that reports the financial condition of a firm at a specific time as recorded by an accountant. It is composed of assets and liabilities.

A balance sheet provides a summary of the way in which a business has used the resources available to it over a period of time. In Table 1 you can see the balance sheet of the Baines Nursery at the start of trading.

Date: 2015-12-11; view: 894