Dollars and Jens
Saturday, July 10, 2004
British Accounts Have Names Like Lenny, While American Accounts Have Names Like Carl
(or, "I Can't Believe I'm So Low on Interesting Blog Ideas That I'm Writing About Accounting")

I've been looking at the financial statements of a British company over the last week, and some of the accounting is a little different. The terminology is different, for one thing -- "stock" rather than "inventory", "turnover" rather than "revenue" (I don't know what they call turnover ratios), etc. Most of them are easy to figure out, though if I had to translate the different equity accounts to American, I'd have some trouble.

There are a few other differences -- for example, liabilities are listed on the asset side of the balance sheet. Their balancing equation, then, is assets-liabilities=equity, vs. our vastly different assets=liabilities+equity.

The most important difference I found was industry-specific. Oil & Gas exploration and production (E&P) companies in the U.S. always provide neat little tables of their production quantities and prices. This company doesn't do that. It does have most of this information in paragraph form -- their North Sea gas production volume is in units of billions of cubic feet, and the price is given in pence per therm. Therms are not trivially converted into cubic feet. West African oil is given in units of barrels per day, and the price is given in dollars per barrel -- no exchange rate is given, but West African revenue is specified, so one can be inferred. Pakistani gas volumes are given, but no other info -- I inferred a price of about 90 pence per thousand cubic feet by working backward from total production revenue, and that seems plausible. But it would have been nice if they had made it easier.

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