Английски за счетоводна дейност

Explaining Equity and Ownership

Hello again, and welcome to Unit 3.3 – Explaining Equity and Ownership.
Today, we’ll follow a short story about a company. As the story develops, you’ll meet all the important vocabulary in action. Then, we’ll stop and unpack the English — with clear examples, and translations.

Meet a small company: BrightBakery Ltd.
Ltd = Limited (ограничена) = отговорността на собствениците е ограничена до размера на техния капитал, което ги предпазва от задълженията на самата компания. "ЕООД" (Еднолично дружество с ограничена отговорност) или "ООД" (Дружество с ограничена отговорност)

At the very beginning, two founders, Maria and Ivan, each invest €25,000.
This money is called a capital contribution (вноска в капитала).
Together, Maria and Ivan become the shareholders (акционери), because they own all the shares in the company.

Notice how “shareholder” always refers to a person or organisation who owns shares. It is not the same as “stakeholder,” which is broader. Стейкхолдер (или заинтересована страна) е лице, група или организация, чиито интереси са засегнати от дадена компания, проект или дейност, или които могат да повлияят на нейния резултат. Това могат да бъдат служители, клиенти, доставчици, инвеститори, конкуренти и дори обществото като цяло, както и други участници, които имат роля в съществуването и успеха на проекта.

So what do Maria and Ivan own exactly?
After their investment, the company’s equity (собствен капитал) is €50,000.

In plain English:

• Equity = the value of the company owned by its shareholders.
• Or: “the company’s net worth, after debts are paid.”

Example phrase you can use:
“In simple terms, equity is what belongs to the owners.”

At the end of the first year, BrightBakery earns a profit of €20,000.
Profits increase equity.
Now equity is €70,000.

An example sentence that you can use here is:

“Our equity has increased to seventy thousand euros due to strong profits.”

Useful verbs here:

• “equity increased to…”
• “equity rose by…”
• “equity stood at…”

Bulgarian note: When reporting, use precise verbs. “Increase” (увеличавам се), “decrease” (намалявам), “remain stable” (оставам непроменен).

The next year, the company pays a dividend (дивидент) of €5,000.
Equity goes down slightly.

Example phrase:
“We paid dividends of five thousand euros, which reduced equity.”

Notice the structure:

• “X reduced Y”
• “Equity was reduced by dividends.”

In English, you often explain the cause using due to or because of.
Example:
“Equity decreased due to the dividend payment.”

Later, BrightBakery takes a bank loan to buy new ovens.
This increases liabilities, not equity directly.

But in conversations, you might need to link the two:

• “The loan increased our liabilities, but our ownership structure (equity) remained the same.”

Vocabulary recap:

• liabilities = пасиви, задължения
• ownership = собственост

Imagine you need to explain this to someone outside accounting, like a colleague from HR.
You wouldn’t say:
“Equity is the residual interest after deducting liabilities.”

Instead, you would say:
“Equity is the value of the company that belongs to the shareholders. It goes up with profits and down when dividends are paid.”

Useful clarifying phrases:

• “In simple terms…”
• “You can think of it as…”
• “What this means is…”

In this lesson, you learned:

• Key words in context: equity, shareholder, ownership, capital contribution, dividend.

Until next time.