Julia Amanda

Nama      : Julia Amanda
NPM        : 30107961
Kelas       : 3DB01

THE BALANCE SHEET

Financial statements are the final product of the accounting process. They provide information on the financial condition of a company. The balance sheet, one type of financial statement, provides 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 accounts receivable. On the other hand, liabilities are the debts that a company owes--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, 1993). 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, accounts 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 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 evaluating the company’s financial position.

Comprehension

A. Answer the following questions about the balance sheet. Questions with asterisks (*) cannot be answered directly from the text.

1.What is the final product of the accounting process?
2.What is a balance sheet?
3.Does the balance sheet provide financial information for a long period of time (for example, January to June 1993) or does it provide information for a specific point in time (for example, on June 30, 1993)?
4.What is the difference between assets and liabilities?
5.How is owners’ or stockholders’ equity determined?
6.How can the relationship between assets, liabilities, and owners’ equity be represented?
7.Does the accounting equation always remain in balance? *Why or why not?
8.How can business use a balance sheet? *As a manager, how would you find a balance sheet useful?

Answer:
1.The final product of the accounting process is the balance sheet.
2.A balance sheet is a final statement that provides a summary of what a company owns and what it owes on one particular day.
3.It provides information for a specific point in time, for example, on Jun 30, 1993.
4.Assets represent everything of value that is owned by a business, liabilities are the debts that is a company owes.
5.Owners’ or stockholders’ equity is determined by subtracting liabilities from assets.
6.It can be represented by the fundamental accounting equation assets equal liabilities plus owners’ equity.
7.Yes, it does. Because one side must equal the other. If not, it must be wrong with the recording.
8. A balance is useful for a business, because it provides a financial picture of a company on a particular day. It provides managers with financial information for company decision making.


B. Complete the balance sheet by writing in the correct terms from the list bellow.

assets                 current liabilities    long-term liabilities
liabilities            fixed assets           current assets
stockholders’ equity

International Manufacturing, Inc
Balance Sheet
December 31, 1993

      
Assets                           Liabilities

Current assets                   Current liabilities

Cash                 $ 49,400    Accounts payable      $ 30,000
Accounts receivable     1,600    Income taxes payable    19,000
Inventories            53,000      Total               $ 49,000
  Total              $104,000   Long-term liabilities
Fixed assets                      Bonds                 $ 20,000
Property             $ 15,000    Long-term notes         40,000
Buildings              50,000      Total               $ 60,000
Equipment              10,000
  Total              $ 75,000    Total liabilities     $109,000
                                Stockholders' equity
Total assets         $179,000    Common stock          $ 47,000
                                 Retained earnings       23,000
                                   Total               $ 70,000
  
                                 Total liabilities and
                                  stockholders' equity $179,000

Vocabulary Exercises

A. Write down any term that you did understand in the reading. Find each term in the reading, look at its context, and try to figure out the meaning. Discuss these terms with your classmates.

B. Look at the terms in the left-hand column and find the correct synonyms or definition in the right-hand column. Copy the corresponding letters in the blanks.

1. _G_ property (line 6)             a. assets equal liabilities plus
                                       owners’ equity
2. _D_ equal (line 12)               b. provide information item by item
3. _F_ condition (line 2)            c. indicate by words or symbols
4. _B_ detail (line 21)              d. have the same value as
5. _A_ accounting equation (line 12) e. a series of transactions, changes,
                                       or functions that bring about
                                       a particular result
6. _H_ monetary (line 15)            f. the existing circumstance
7. _E_ process (line 1)              g. anything owned by a person
8. _C_ express (line 15)             h. of or pertaining to money

C. Discuss the following questions with a partner. In giving your answers, try to use the italicized terms.

1.What is the difference between accounts receivable and accounts payable?
2.Why are accounts receivable and cash considered current assets while property and equipment are considered fixed assets? What do you think the difference between current and fixed assets?
3.The owners’ equity in a company equals assets minus liabilities. What is meant by owners’ (or stockholders’) equity?
4.If you were a manager, how would you use the balance sheet to evaluate you company’s financial condition?
5.What do you consider your personal assets? Do you have any liabilities? What are they?

Answer:
1.Accounts receivable is assets and accounts payable is liabilities.
2.Because they are easily changed into money.
3.Net owning.
4.The manager know were the company is financial healthy.
5.Mobile.

Text Analysis

Look at the reading to answer these questions.
1.What does each of the following refer to?

  LINES     WORDS       REFERENTS
   1        they        financial statement
   9        this        the owners’ share if a business
  11        this        the relationship of its assets
  15        these       three factors assets, liabilities and
                        owners’ equity

2.In line 6, what are property, equipment, and accounts receivable examples of?
Assets

3.In line 7, what do suppliers and banks refer to?
To whom the company has debts..

4.In lines 5-7. two different phrases are used to incorporate example in the reading. What are these phrases?
a. Assets
b. Liabilities

5.Another method of clarification by example is the use of mathematical representations. From the reading, copy examples that use mathematical symbols.
a. The fundamental accounting equation.
b. Assets equal to liabilities plus owners’ equity.

6.In lines 28-31, two uses of the balance sheet are given. What are the key words that show each of these uses is in a different area? What uses does each word introduce?

  KEYWORDS           USES

Classification

Categories of the balance sheet can be classified to show the relationship between them. Fill in the following blanks based on the information provided in the reading and in Figure 1 (page 79).

Class:   Assets                   Class:   Liabilities
Members: Current assets           Members: Current liabilities
        Fixed assets                      Long-term liabilities

Class:   Current assets           Class:   Current liabilities
Members: Cash                     Members: Accounts payable
        Accounts receivable               Income taxes payable
        Inventories

Class:   Fixed assets             Class:   Long-term liabilities
Members: Property                 Members: Bonds
        Buildings                         Long-term notes
        Equipment

Application

Using the information in the reading, answer the following questions. Give reasons to support your answers.

1.Which of the following is not a fixed assets: office equipment, machinery, marketable securities, land, and buildings? Why?
Marketable securities. Because its easy to change into money.

2.Are the following liabilities current or long-term: bank loans payable, accounts payable, mortgage bonds payable, taxes payable, and long-term notes payable? List each under the correct heading.

 CURRENT LIABILITIES                    LONG-TERM LIABILITIES
 Accounts payable                       Bank loans payable
 Taxes payable                          Mortgage bonds payable
 Notes payable

Name : Julia Amanda
Class : 3DB01
NPM : 30107961

Accounting is frequently called the “language of business” because of its ability to communicate financial information abaout an organization. Various interested parties, such as managers, potential investors, creditors, and the government, depend on a company’s accounting system to help them make informed financial decisions. An affective accounting system, therefore, must include accurate collecting, recording, classifying, summarizing, interpreting, and reporting of information on the financial status of an irganization.

In order to achieve a standardized system, the accounting process follows accounting principles and rules. Regardless of the type of business or the amount of money involved, common procedures for handling and presenting financial information are used. Incoming money (revenues) and outgoing money (expenditures) are carefully monitored, and transaction are summarized in financial statements, which reflect the major financial activities of an organization.

Two common financial statements are the balance sheet and the income statement. The balance sheet shows the financial position of a company at one point in time, while the income statement shows financial performance of a company over a period of time. Financial statement allow interested parties to compare one organization to another and/or to compare accounting periods within one organization. For example, an investor may compare the most recent income statements of two corporations in order to find out which one would be a better investement.

People who specialize in the field of accounting are known as accountants. In the United States, accountants are usually classified as public, private, or governmental. Public accountants work independently and provide accounting services such as auditing and tax computation to companies and individuals. Public accountants may earn the title of CPA(Certified Public Accountant) by fulfilling rigorous requirements. Private accountants work solely for private companies or corporations that hire them to maintain financial records, and governmental accountants work for governmental agencies or bureaus. Both private and governmental accountants are paid on a salary basis, whereas public accountants receive fees for their services.

Through effective application of commonly accepted accounting systems private, public, and govermmental accountants provide accurate and timely financial information that is necessary for organization decision making.


Comprehension
Answer the following question about accounting. Question with asterisks cannot be answered directly from the text.
why is accounting called the “language of business”?
How is a standardized accounting system achieved?
What are revenues and expenditures?
What do the balance sheet and income statement have in common? How are they different?
*How might the information contained in financial statements be useful to managers? *How might creditors use this information?
How are accountans classified in the United States?
What kinds of services do public accountants provide?

What is a CPA? *Do you have a similar type of position in your country? *Explain.
*Which type of accounting-public, private, or governmental-appeals to you the most? *Why?
*What are some management decisions that might be based on accounting information?


Answer :

1. According is called the “language of business” because of its ability to communicate financial information about on organization.

2. In order to achive a standardized accounting system the accounting process follows accounting principles and rules.

3. Revenues are incoming money and expenditures are outgoing money.

4. The balance sheet and the income statement are two common financial statement. They are different, the first shows the financial position of a company of one point of time, while the second shows the financial performance of a company over a period of time.

5. The information contained in financial statements might be usefull to creditors in help them to find out whether the company will be able to repay the credit on time or not.

6. In United States, accountants are classified as public, private, and governmental.

7. Public accountant provide accounting services such as auditing and tax computation to companies and individuals.

8. A CPA is a Certified Public Accountant. Yes, we had. Formerly faculty of economic graduates of 5 elite universities got ‘Drs….AK’ degree.

9. Personal question

10. In some company financial decision making might be based on accounting information. For example the management want to expands its business to build a bigger factory to introduce new variety of goods.

Circle the letter of the answer that best completes each of the sentences below.
Accounting information is used by ______to help them make financial decisions.

a. managers

b. potential investors

c. creditors

d. all of the above
Regardless of the type of business or the amount of money ivolved :

a. all companies use identical accounting systems

b. balance sheets are more important than income statements

c. common procedures are used in handling financial information

d. no standardized accounting system is employed

3. Business monetary transactions are summarized in :

a. bank books

b. financial statements

c. computers

d. cash registers

4. Public accountants may earn the title of CPA by :

a. becoming governmental accountans

b. paying a fee

c. fulfilling rigorous requirements

d. obtaining a Bachelor of arts degree in accounting

5. Private and governmental accountatnts are paid on a____basis.

a. salary

b. monthly

c. fee

d. weekly


Vacabulary Exercises
A. Subtitute appropriate terms for the italicized words or phrases in the sentences below.


status agencies monitored maintain independently

procedure fee hire rigorous solely


1. Many accounting departments have strict enterance requirements;

only the most qualified applicants are allowed to enter these

programs. rigorous

2. The particular method used to process employee insurance

claims may vary from company to company procedure

3. The stock market is closely watched every day. monitored

4. Rather than expand into foreign lines, the dress shop manager

chose to deal only with domestic fashion designers. solely

5. Although the consultant’s charge for services was high, his

guidance and advice were well worth the money. fee

6. The financial condition of a company is reflected in its financial

statements. status

7. When the business began to expand, a second bookkeeper was

brought in to help keep the books. maintain

8. In the United States there are numerous organizations that

provide services at the local, state, and national levels. agencies



B. Complete the sentences with the noun, verb, and adjective forms provided.

1. Communication/to communicate/communicative

a. Supervisor should strive for two-way communication with their

employees.

b. By using an overhead projector, the guest speaker was able to

communicate his statistical information clearly.

c. Because of the clerk’s highly developed communicative skills, she was

given a position that required her to deal directly with customers

2. Information/informed/informative

a. The owner informed his employees that they would all receive a 5 percent pay increase.

b. Getting Acquainted with Accounting, by John L. Carey, is very informative book.

c. Financial information is essential for organizational decision making.

3. Allowance/allowed/allowable
The supervisor lost control of his staff members after he allowed them to override his decisions.
When the factory was built 50 years ago, little allowance was made for remodeling and expansion.
Althought allowable, smoking was discouraged in the lunch room.

4. Fulfillment/fulfill/fulfilling
At times the assembly line worker felt a lack of profesiomal fulfillment
When he was promoted to production supervisor, however, his job became much more fulfilling.
Before the accountant could became a CPA, she had to fulfill a number of requirements.

5. Standars/has standardized/standard
The standard paper size in United States for business letters and memorands is 8,5 x 11 inches.
The computer department has standardized its procedures for storting and retrieving data.
Nowadays rigorous standards are enforced in the area of food processing and packaging.

C. Fill in the blanks below with the most appropriate terms the list.


parties financial statement reflected standardized allows

whereas interpretations informed communicates rigorous


An income statement is one example of a financial statement, it communicates financial information about a company over a period of time. A standardized format

Is used to present the financial information. This allows interested parties to compare one income statement to another in order to make informed financial decisions. But there is still a great deal of risk involved in financial decision making because the information reflected in an income statement is object to variety of interpretations.


Look at the reading to answer these questions.

What does each of the following refer to?

LINES WORDS REFERENTS

1 its accounting

4 them whereas parties

19 another corporation

21 one organization

     Name    :  Julia Amanda
     Class   :  3DB01
     NPM     :  30107961

MULTINATIONAL CORPORATIONS

A company often becomes involved in international trade by exchanging goods or services with another country-importing raw materials it may need for production or exporting finished products to a foreign market. Establishing these trade relationships is the first step in the development of a multinational business. At this stage, however the corporation's emphasis is still on the domestic market. As trade expands, the corporation's dealing with companies or people outside the “home country” of that corporation increase.

The corporation then begins to view the whole world as a base for production and marketing operations. The next step in the development of a multinational business is focusing on the world market. The company may establish a foreign assembly plant, engage in contract manufacturing, or build a foreign manufacturing company or subsidiary. Therefore, a multinational corporation is a company that is primarily based in one country and has production and marketing activities in foreign countries.

Since World War II, multinational corporations have grown rapidly. The names and products of many of the multinational have become well-known in the world marketplace: International Business Machines (IBM), Royal Dutch Shell, Panasonic, Coca-Cola, and Volkswagen. Coca-Cola, for example, now has operations in more then 180 countries.

A multinational corporation operates in a complex business environment. Cultural, social, economic, political, and technological system vary from country to country. In order to operate successfully, a multinational company needs a basic understanding and appreciation of the foreign business environment.

Comprehension

A. Answer the following questions about multinationals. Questions with asterisk (*) cannot be answered directly from the text.

1. What is the first step in the development of a multinational business?

2. Where is the company's emphasis when it is simply trading with other countries?

3. What market does a multinational corporation focus on?

4. A company may establish its manufacturing operations in foreign countries? What are three forms that these operations may take?

5. What is a multinational corporation?

6 When have multinationals grown rapidly? *Why do you think they have experienced this period of rapid growth?

7. *What are some products that are produced by the following multinational corporations: IBM, Coca-Cola, Panasonic, Shell, and Volkswagen?

8. *Why does a multinational corporation operate in a more complex business environment than a domestic company?

9. *What are some of the social and political factors that can vary from country to country?

10. Why does a multinational corporation need a basic understanding of foreign business environments? *How can a multinational gain this understanding?

Answer:

1. The first step (it) is establishing the trade relationship with another country.

2. The companies emphasis (it) is still on the domestic market.

3. A multinational corporation (it) focuses on the world market.

4. The three forms (they) are: It may establish a foreign assembly plant, engage in contract manufacturing, and build a foreign manufacturing company or a subsidiary.

5. A multinational corporation (it) is a company that is primary based in one country and has production and marketing activities in foreign countries.

6. Multinationals (they) have grown rapidly since World War II. Because during the war many countries knew what resources are scarce or abundant in other countries.

7. IBM: International Business Machines, Royal Dutch Shell oil, Panasonic electronic, Coca-Cola soft drink, Volkswagen automobiles.

8. Because a multinational corporation focuses on the world market, and each country has its own system: culturally, economically, politically and technologically. Where as a domestic company only operates in one country which its system its already familiar.

9. Socially: In Japan life time employment system is applied, where as in Indonesia contract system employment is used.

Politically: Thailand is monarchism, Indonesia is democratic.

10. In order to operate successfully. This understanding can be gained through market research.



B. Determine which of the following statement are true and which are false. Then put T or F in the blanks. Rewrite false statements to make them true.

1.  T  Multinational corporations have grown rapidly since 1945.

2.  F  Any company engaged in international trade is a
       multinational business.

3.  T  In order to operate successfully, a multinational company
       needs to be aware of national and international business
       environments

4.  F  A multinational corporation focuses on its “home country”
       or domestic market.

5.  F  A multinational company does not establish factories in
       foreign countries.

Vocabulary Exercises

A. Write down any terms that you did not understand in the reading. Find each term in the reading, look at its context, and try to figure out the meaning. Discuss these terms with your classmates.


B. Look at the terms in the left-hand column and find the correct synonyms or definitions in the right-hand column. Copy the corresponding letters in
the blanks.

1. _j_ corporation (line 5)    a. chiefly; principally

2. _e_ expand (line 6)         b. function in; work in

3. _g_ view (line 8)           c. change

4. _i_ stage (line 5)          d. a company having more than half
                                  of its stock owned by another
                                  company

5. _a_ primarily (line 13)     e. increase the dimensions of

6. _h_ base (line 8)           f. growth; expansion

7. _c_ vary (line 21)          g. see; look at

8. _d_ subsidiary (line 21)    h. foundation

9. _b_ operate in (line 20)    i. a step in development

10._f_ development (line 4)    j. a type of business organization 
                                  formed by an association of 
                                  stockholders

C. Fill in the blanks in the following paragraph with the most appropriate terms form the list.

base       operate in     appreciation of    expands
vary       corporation    development        subsidiary
stages     involved in    view               relationships

During the development of a corporation, the organizational structure may vary over time and pass through a number of stages. As the corporation grows, it expands its operations. It might become involved in setting up a subsidiary. Although the corporation still has a primary or “home base,” establishment of a subsidiary allow the company to enter into new relationships with a view toward increasing its production and marketing capabilities.

Text Analysis

Look at the reading to answer these questions.

1.What does each of the following refer to?

LINES    WORDS     REFERENTS

2        it        a company

5        this      stage first step

17       IBM       International Business Machine


2.Match the connective words or phrases with the appropriate 
  functions.

_c_ however (line 5)         a. summarizing

_d_ then (line 8)            b. illustrating

_a_ therefore (line 12)      c. contrasting

_b_ for example (line 18)    d. sequencing information


3.Summarize the two general steps in the 
  development of a multinational corporation.

a. establishing these trade relationship. (line 3-5)

b. focusing on the world market. (line 8-10)


4.Sometimes the definition of a term takes this form:

                                a           controls the 
A restrictive trade law → is → law → that → number of goods
                                            imported or exported

                                         { that  }
term being defined → verb to be → class→ { which } → definition

This type of definition is known as a formal definition.
In a formal definition the term or word being defined occurs first.
It is followed by the verb to be (usually is or are).
Next the class states the general group that the term belongs to:

TERMS                        CLASSES

multinational corporation    company
typewriter                   business machine
absolute advantage           theory of specialization


After the class, either that or which is used. Finally,
the definition itself includes information distinguishing this
term other members of its class.

Write formal definitions for multinational corporation (page 56),
corporation (page 57), and subsidiary (page 57).

a. A multinational corporation is a company that is primarily based in one country
   and has production and marketing activities in foreign
   countries.

b. __________________________________________________________________
   __________________________________________________________________

c. __________________________________________________________________
   __________________________________________________________________


5.Formal definitions may be shortened to a more general form, which 
  includes less information. This is often called a semi-formal
  definition. The class, that or which, and the verb to be are
  omitted.


A restrictive trade law → controls → the number of goods imported 
or exported

Term being defined      → verb     → definition


Change the formal definition from the previous exercise into
semi-formal definitions.


a.A multinational corporation is primarily based in one country
  and has production and marketing activities in foreign countries.

b.____________________________________________________________________
  ____________________________________________________________________

c.____________________________________________________________________
  ____________________________________________________________________

TENSES

Pr – Present; Ps-Past; S-Simple; C-Continuous; F-Future; Pf-Perfect


1. Pr.S - He writes many letters everyday. (habitual action)

2. Ps.S - He wrote m.1 yesterday. (occurred in the past)

3. Pr.C - It is writing m.1 now. (is occurring right now)

4. Ps.C - He was writing m.1 when it rained yesterday. (two actions in the past).

5. Pr.F - He will write m.1 tomorrow. (will happen in the future).

6. Ps.F - He would write m.1 yesterday, but he didn't have time.

7. Pr.Pf - He has written m.1 already (has just happened now).

8. Ps.Pf - He had written m.1 when it rained yesterday. (two actions in the past)

9. Pr.Fc - He will be writing m.1 when you visit him tomorrow. (in the future)

10.Ps.Fc - He would be writing m.1 when you visited him yesterday. (in the past)

11.Pr.FPf - He will have written m.1 when you come tomorrow (in the future)

12.Ps.FPf - He would have written m.1 when you come yesterday. (in the past)

13.Pr.Pfc - He has been writing m.1 for two days until now. (continuously from past
until now).

14.Ps.Pfc - He had been writing m.1 for two days until yesterday (continuously
from past to past)

15.Pr.Fpf.C - He will have been writing m.1 for two days will tomorrow. (until in
the future)

16.Pr.F.Pfc - He would have been writing m.1 for two days until yesterday. (until
in the past)

KELAS :: 3 db 01

NPM :: 30107961