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ТАВРІЙСЬКИЙ ДЕРЖАВНИЙ АГРОТЕХНОЛОГІЧНИЙ УНІВЕРСИТЕТ
КАФЕДРА ІНОЗЕМНИХ МОВ
Англійська мова
ДЛЯ СТУДЕНТІВ I КУРСУ
ЗА СПЕЦІАЛЬНІСТЮ
«Облік та аудит»
Мелітополь
2012
Упорядник: ст. викладач Т. В. Жукова
Рецензент: к. економ. наук, доцент Вороновська О.В.
к. філ. наук Полікарпова Ю.О.
Навчальний посібник з розвитку навичок читання та говоріння для студентів
І курсу за спеціальністю “Облік і аудит” схвалено на засіданні кафедри іноземних мов ТДАТУ.
Протокол № від 2012 р.
Посібник затверджено на засіданні методичної комісії факультету економіки і бізнесу ТДАТУ.
Протокол № від 2012 р.
|
[1] ПОСІБНИК З РОЗВИТКУ НАВИЧОК [2] ЧИТАННЯ ТА ГОВОРІННЯ
[3] [4] Посібник “English for Accountants” призначений для студентів І курсу факультету економіки і бізнесу за спеціальністю “Облік і аудит”. [5] Посібник включає у собі 20 розділів, що охоплюють широке коло тем з бухгалтерського обліку: цикли бухгалтерського обліку, основна фінансова звітність, система вимірювання у бухгалтерському обліку, напрямки бухгалтерського обліку, головні користувачі фінансової інформації, і т. п. [6] Тематика та характер учбового матеріалу, що представлений у посібнику, забезпечують формування у студентів професіонального словника, вмінь та навичок читання та говоріння у межах професійної тематики, вміння вилучати потрібну для роботи інформацію, навичок письмового перекладу та складання анотації згідно з програмою. [7] Тексти підібрані з оригінальних сучасних джерел. Перед кожним текстом є англо-українсько-російський словник спеціальних термінів. Обсяг лексико-граматичних вправ забезпечує роботу в аудиторії та виконання домашніх вправ. Посібник включає ряд граматичних вправ, які забезпечують повторення теоретичного матеріалу. Також посібник має словник основних бухгалтерських термінів. Схеми та таблиці полегшують сприйняття лексичного матеріалу. Завдання посібника мають репродуктивний та продуктивний характер.
[8] [9] What is Accounting?
[10] [11] Occupational Opportunities in Accounting
[12] [13] Building Careers in Accounting
[14] [15] Branches of Accounting [16] c) external and internal auditors' functions.
[17] [18] Types of Private Sector Organization [19] Unit VI [20] The Users of Financial Information
[21] [22] Steps in the Accounting Cycle
[23]
[24] [25] Steps in the Accounting Cycle [26] Part II
[27] [28] The Balance Sheet
[29] [30] The Income Statement [31] VI. Checking facts and ideas. Decide if these statements are true or false.
[32] [33] The Statement of Cash Flows [34] Measurement Principles [35] Asset Value
[36] [37] Measurement Principles [38] Net Income [39] Part I
[40] [41] Measurement Principles [42] Net Income [43] Part II
[44] [45] Problems of Measurement [46] Unit XVI [47] Managerial Accounting [48] Budgetary Planning [49] Grammar: Reported Speech [50] Unit XVII [51] Cost Finding
[52] [53] Other Purposes of Accounting Systems
[54] [55] Summary Structure [56] Accounting and Financial Reporting in Ukraine [57] Unit XX [58] The Accounting System of Great Britain and Northern Ireland: [59] It’s General Regulatory Scheme in Relation to Ukrainian Accounting [59.0.1] NOTES [60] Account
[61] |
Передмова
|
Grammar: Indefinite Tenses, Modal Verbs |
Wordlist
|
account |
|
|
accounting record |
обліковий запис |
|
assure |
забезпечувати |
|
available funds |
наявні кошти |
|
available income |
наявний прибуток |
|
business decision |
ділове рішення |
|
expenditures |
витрати |
|
interpret |
пояснювати |
|
keep |
зберігати |
|
owner |
власник |
|
profit |
прибуток |
|
profit-making organization |
прибуткова організація |
|
spend priorities |
витрачати першочергово |
|
sufficient |
достатній |
|
tax |
податок |
|
tax revenue |
збирання податків |
|
transaction |
транзакція, операція, угода |
I. Read the text and give the definition to the term 'accounting'.
Every business manager and owner needs good financial information to make good business decisions. Orderly records of business' financial activities are called accounting records. Planning, keeping, analyzing and interpreting of financial records and transactions is called accounting.
Transactions include buying and selling of goods and services, acquiring insurance, using supplies. Transactions may be recorded by hand or they may be recorded in a computer system. Of course, the trend today is to use computers since the process is often repetitive and complex, and computers greatly simplify the task.
After the transactions have been recorded, they are usually classified into groups that have common characteristics. For example, all purchases are grouped together, as are all sales transactions. A businessman is thus able to obtain needed information about purchases, sales, and other transactions that occur over a given period of time. The methods used to record and summarize accounting data into reports are called an accounting system. Systems that use computers enable an organization to get financial reports daily if they so desire. One purpose of accounting is to help managers to evaluate the financial condition and the operating performance of the firm so that they may make better decisions. Another is to report financial information to people outside the firm such as owners, creditors, suppliers, employees, and the government (for tax purposes).
Both large and small profit-making organizations use accounting information to make decisions. Managers and owners use accounting information to decide if the profits are sufficient. Should selling prices be increased or decreased? How many workers should be employed? Should different or additional products be sold? Should the size of a business be increased or decreased? Non-profit organizations, such as churches, social clubs, and city governments must keep expenditures within available income. Direction of non-profit organizations must decide on spending priorities to stay within the funds available1. City government must plan carefully to assure that tax rates are sufficient to provide adequate tax revenues2. At the same time, city governments keep financial records to restrict expenditures to priority items.3 Thus, non-profit organizations also need accounting information as the basis for making decisions.
Inaccurate accounting records often contribute to business failure.4 Failure to understand accounting information can result in poor business decisions. Accounting training helps business owners and managers to avoid business failure.
NOTES
1. to stay within the funds available - оставаться в рамках наличных средств
2. to provide adequate tax revenues - обеспечивать соответствующие сборы налогов
3. to restrict expenditures to priority items - ограничивать расходы в соответствии с приоритетностью статей
4. contribute to business failure - приводить к банкротству предприятия
II. Answer the following questions:
1. How are orderly records of business΄ financial activities called?
2. What is accounting?
3. What is called an accounting system?
4. Who uses accounting information?
5. What are the purposes of accounting?
6. Why do they use this information?
7. What can failure to understand accounting information result in?
8. What helps managers to avoid business failure?
III. Find six pairs of opposites.
|
failure decrease poor profit-making earn rise |
fall increase non-profit success spend rich |
Make up your own sentences using these words.
IV. Put a word or word combination in the correct place to complete the following sentences.
|
financial records, business failure, accounting, information, keep expenditures, terms, system, transactions |
1. Owners use accounting … to decide if the profits are sufficient.
2. Non-profit organizations must … within available income.
3. Planning, keeping, analyzing and interpreting of … is called accounting.
4. Accounting training helps business owners to avoid … .
5. … is often referred as the language of business.
6. A lot of accounting … are used in all phrases of business.
7. … include buying and selling of goods and services, acquiring insurance, using supplies.
8. The methods used to record and summarize accounting data into reports are called an accounting …
V. Look back at the text and choose the correct words to go together.
to contribute to / in business failure
to result to / in poor business decisions
to use accounting information to / for make decisions
the size of / in a business
to keep expenditures within / throughout available income
to decide on / about spending priorities
to stay within / among the funds available
VI. Read the text without a dictionary and answer the question: “How is accounting used in everyday life?”
Accounting in everyday life
Wage earners must prepare and submit personal income tax reports. Many states and cities require that wage earners submit similar tax reports. Everyone must plan ways to balance expenses with available income. Persons who know basic accounting principles and concepts are better able to plan and keep adequate personal records.
Some persons use knowledge of accounting as a means of earning a living. Almost all persons use knowledge of accounting in personal financial activities.
VII. Read the text and find out its main idea.
Accounting is often referred to as the language of business. Everyone in business must be able to use this language. Typists use accounting terms in typing financial statements and other accounting reports. Sales clerks or general office clerks prepare basic accounting papers. Secretaries use basic accounting language in taking dictation and preparing correspondence. These workers do their jobs better if they have some accounting knowledge and can use accounting terms. Many common accounting terms are used in all phases of business.
VIII. Check your grammar.
Use the verbs in brackets in the Indefinite Tenses and required voice (Active or Passive).
1. The accounting field (to have) many opportunities for young persons.
2. One important decision a person (to make) in a lifetime is how to earn a living.
3. The size of a business (to increase) last year.
4. Accounting language (to use) often in preparing correspondence.
5. Records of business' financial activities (to call) accounting records.
6. Basic accounting papers (to prepare) by sales clerks or general office clerks.
IX. Check your grammar.
Translate into Ukrainian paying attention to the different meanings of the modal verbs and their equivalents.
1. Business managers need good financial information to make good business decisions.
2. Secretaries do their jobs better if they can use accounting terms.
3. An owner of a firm has to decide how many workers should be employed.
4. Everyone in business must be able to use accounting language.
5. You may learn basic accounting principles and concepts.
6. Wage earners must prepare personal income tax reports.
Talking points
Using the information from the texts
1. Describe the functions of accounting.
2. Explain the definition of accounting system.
3. Name the main users of accounting information.
|
Grammar: the Present Indefinite Tense |
Wordlist
|
accountant |
кваліфікований бухгалтер |
|
accounting clerk |
рахівник, конторський службовець |
|
bookkeeper |
бухгалтер |
|
bookkeeping |
рахівництво, ведення облікових регістрів |
|
estimate |
оцінювати, обчислювати |
|
general office clerk |
конторський службовець, секретар |
|
keep records |
вести бухгалтерський облік |
|
record |
запис, вносити |
|
summarize |
узагальнювати |
|
supervise |
спостерігати, завідувати |
I. Read the text and distinguish between accountants, bookkeepers and accounting clerks.
The main available accounting jobs can be grouped into major categories. The four major accounting jobs categories are: accountants, bookkeepers, accounting clerks and general office clerks.
Persons who plan, summarize, analyze, and interpret accounting information are called accountants. Persons who do general accounting work plus some summarizing and analyzing are often called bookkeepers. Persons who record, sort, and file accounting information are often called accounting clerks. Persons doing general kinds of office tasks, including some accounting tasks, are called accounting clerks. The US Department of Labor has reported that over 1,800,000 persons are employed as bookkeeping workers and accountants. In addition, many hundreds of thousands of general office clerks do some accounting tasks. Many more persons are employed in areas where some accounting knowledge is needed. Some of these areas include banking, teaching, finance, automated processing, and management.
An increasing amount of future accounting work will be done using automated equipment. However, the estimated future personnel needs show that use of automated processing is not decreasing the need for accounting workers. The need for accountants and bookkeepers is expected to rise in spite of the expanded use of office machines. Business continues to need accountants, bookkeepers, and accounting clerks.
Add to this some other people employed at a company. (Look at the picture below.)
II. Re-read the text to find the answers to these questions.
1. What are the four major categories of jobs in accounting?
2. What three kinds of things do accountants do?
3. How are the persons who record, sort and file accounting information called?
4. Persons doing kinds of office tasks are called general office clerks, aren’t they?
5. How many persons are employed as bookkeepers and accountants in the USA?
6. What are the areas where some accounting knowledge is needed?
7. Is the need for accountants and bookkeepers expected to rise in future? Prove it.
8. Look at the picture. What are these persons responsible for?
III What meaning have the following word combinations in the text?
Available accounting jobs, major categories, to interpret accounting information, to do general accounting work, to summarize and analyze, to be employed, automated processing, in spite of the expanded use of office machines.
IV Complete each sentences with a word or phrase from the text.
1. Persons who plan, summarize, analyze, and interpret … are called accountants.
2. Persons who do general accounting work are often called … .
3. Persons who record, sort, and … are called accounting clerks.
4. General office clerks do general kinds of … .
5. Accounting knowledge is needed in such areas as banking, .., .., .. .
6. The need for accountants and bookkeepers is expected to rise in spite of … .
V. Check your grammar.
Insert the article (a, an, the or Ø) where it is necessary.
1. Records of … commercial contracts have been found in … ruins of Babylon.
2. … method of … bookkeeping began with … development of … commerce of… Italy.
3. In …late 18th and early 19th centuries, … Industrial Revolution provided … important stimulus to … accounting and … bookkeeping.
4. … rise of … manufacturing, … trading and … shipping made accurate financial records … necessity.
5. … history of … bookkeeping closely reflects … history of … commerce, … industry and … government.
What new facts have you learned about the history of the method of bookkeeping?
VI Read the text and find out the difference between a public accountant and a private accountant.
Accountants
Accountants plan accounting systems used by business. Accountants also interpret financial information and check the accuracy of that information. Accountants often supervise work of other accounting workers. In medium to large business, accountants help owners and managers to make financial decisions.
Some accountants work as members of accounting firms that sell accounting services to other businesses. For example, a small grocery store may not need a full-time1 accountant. The owner or an employee normally does the day-to-day accounting tasks. These tasks include recording, summarizing, and basic accounting information. To plan, summarize, analyze, and interpret information, the owner hires2 an accounting firm. A business selling accounting services to the general public is called a public accounting firm. Public accounting firms provide a variety of accounting services to other businesses and individuals. Accounting services may include all accounting tasks as well as planning an accounting system. Accounting firms may periodically check the accuracy of a business΄ records and prepare annual statements3 and reports.
Some accountants are employed by a single business. Private accountants' work is similar to that done by public accounting firms. However, a private accountant works for only one business.
NOTES
1. full- time – полный рабочий день
2. hire - нанимать
3. annual statements – годовые отчеты
VII. Put these words into the correct order to form the questions. Answer the resulting questions.
1. accountants, do, What, plan?
2. financial decisions, to, Whom, they, help, make, do?
3. work, How, do, some, accountants?
4. do, the owner or an employee, does, What tasks?
5. the owner, hire, does, an accounting firm, Why?
6. may, What, include, accounting services?
VIII. Which words are missing from the following sentences?
1. Accountants interpret financial information and check … .
2. Accountants help owners and managers to make … .
3. The owner or an employee normally does the … accounting tasks.
4. Public accounting firms provide a variety of … to other businesses and individuals.
5. Accounting firms may periodically check the accuracy of a business' records and prepare annual … and … .
6. A private accountant works for … .
IX. Read the text and explain a bookkeeper’s tasks.
Bookkeepers
A bookkeeper’s tasks include recording, summarizing, and reporting basic accounting information. In a few businesses, bookkeepers may help owners and managers to interpret accounting information. Many small or medium businesses employ a public accountant to plan an accounting system. However, a bookkeeper does all the remaining accounting tasks.
Bookkeepers in small firms may do additional general office work. Many businesses want bookkeepers with typing and filing skills. These two general office skills are closely related to the preparation of accounting reports.
X. Read the text and determine accounting tasks to be done by accounting clerks and general office clerks.
Accounting Clerks
Some businesses have large quantities of day-to-day accounting tasks to be done. These businesses do not want their highly-trained accountants doing the routine work. Instead, accounting clerks are responsible for day-to-day accounting tasks. Accountants are then free to plan and interpret financial information as well as supervise other accounting workers.
Accounting clerk’s job titles often describe the accounting records on which they work. For example, an accounting clerk working with payroll records1 is sometimes known as a payroll clerk. Other common job titles include accounts receivable clerk2, inventory clerk3, and vouchers clerk4. These accounting clerks work with a small part of the total accounting activities. However, accounting clerks who know the total accounting system understand the importance of the work being done. Also, knowledge of a total accounting system helps an accounting clerk to earn promotion5 to more responsible positions.
General Office Clerks
Most office workers do some accounting work. A secretary may handle cash payments6 from a small cash fund. A typist may type accounting reports. A salesperson may prepare sales invoices.
Accounting tasks performed by general office clerks must be done according to basic accounting concepts and procedures. All persons performing some accounting tasks need to understand a business basic accounting system. General office clerk with a knowledge of accounting better understand the importance of the accounting tasks they do.
NOTES
1. payroll records – платежная ведомость
2. accounts receivable clerk - кассир
3. inventory clerk - кладовщик
4. vouchers clerk – служащий, регистрирующий ваучеры
5. earn promotion – заработать продвижение по службе
6. handle cash payments – распоряжаться наличными деньгами
XI. What meaning have the following word combinations in the text?
Large quantities of day-to-day accounting tasks, highly-trained accountants, the routine work, to be responsible for, to supervise accountant workers, a payroll clerk, the total accounting system, a small cash fund, basic accounting concepts and procedures.
XII. Match the names of the jobs with their definitions. (More than one variant is possible).
A B
|
1. Accountants
2. Bookkeepers
3. Accounting clerks
4. General office clerks |
a) may handle cash payments from a small cash fund. b) type accounting reports. c) are responsible for day-today accounting tasks. d) help owners to interpret accounting information and do additional general office work. e) work with a small part of the total accounting activities. f) plan accounting system used by business. g) record and summarize basic accounting information. h) interpret financial information and check its accuracy. i) answer the phone and greet visitors. |
XIII. The following sentences have mistakes. Correct them.
1. The accounting jobs can be grouped into three major categories: accountants, bookkeepers and general office clerks.
2. Accounting clerks plan accounting systems used by business.
3. A private accountant may work for a number of businesses.
4. An accounting clerk can’t earn promotion to more responsible positions.
5. It isn’t necessary for general office clerks to understand a business’ basic accounting system.
XIV. Check your grammar.
Put questions to the words underlined.
1. Many small or medium businesses employ a public accountant to plan an accounting system.
2. A small store does not-need a full-time accountant.
3. Bookkeepers need to have typing and filing skills.
4. An accountant clerk working with payroll records is known as a payroll clerk.
5. You may obtain an entry-level job as a general office clerk.
6. Accounting clerks are responsible for day-to-day accounting tasks.
|
Grammar: Present Tenses |
Wordlist
|
be eligible for |
бути вибраним, відповідати |
быть выбранным, соответствовать |
|
beyond |
поза, за, зверх |
вне, за, свыше |
|
career |
кар’єра, діяльність, успіх |
карьера, работа, успех |
|
complete |
закінчувати |
завершать |
|
designation |
призначення на посаду |
назначение на должность |
|
entry-level job |
перший ступінь кар’єри (нижча посада) |
первая ступень карьеры (низшая должность) |
|
experience |
досвід |
опыт |
|
ladder |
сходи |
лестница |
|
immediately |
негайно |
немедленно |
|
obtain |
отримувати, одержувати |
получать |
|
reason |
причина |
причина |
|
require |
вимагати |
требовать |
|
rigorous |
точний, суворий |
точный, строгий |
|
substitute |
змінювати, заміщати |
заменять, замещать |
I. Read the text and arrange accountants' jobs in order of their importance.
The first jobs that individuals get are called entry-level jobs. Persons completing high schools accounting study may get entry-level jobs as bookkeepers, accounting clerks, or as general office clerks. Persons with accounting study beyond high school may get entry-level jobs as bookkeepers or accountants.
The illustration below represents careers in accounting. The bottom step of ladder represents those office jobs which are not primarily accounting. These jobs do however include some accounting tasks.
The second career ladder step, accounting clerks, in where most persons with one year of high schools accounting study may find entry-level jobs. Some individuals with two years of accounting study can obtain entry-level jobs as bookkeepers, the third career ladder step. However, persons with both high school accounting study and experience are preferred when promotions are made.
Persons with college accounting education usually obtain entry-level jobs on the top career ladder step as accountants. Many professional accountants also earn the Certified Public Accountant (CPA) designation. Each state sets standards that persons must meet to earn the CPA. These standards usually include passing a rigorous examination and having a specified amount of accounting experience. In some states, college accounting study can be substituted for some of the required experience. The CPA designation is important to professional accountants. The public knows that CPA’s are accounting professionals. Public accounting firms often require that accounting employees earn a CPA to be eligible for promotion to top positions. Many businesses also require that top accounting persons earn the CPA designation.
II. Answer the questions.
1. How are the first jobs that individuals get called?
2. What kinds of jobs may be obtained by persons with high school accounting study?
3. What office jobs does the bottom step of ladder represent?
4. What must a person do to earn the Certified Public Accountant designation?
5. Whom do they usually call accounting professionals?
III. What meaning have the following word combinations in the text?
Entry-level jobs, to complete high school accounting study, beyond high school, the bottom step of ladder, to obtain entry-level jobs, to earn the Certified Public Accountant, a specified amount of accounting experience, CPA designation, to be eligible for promotion to top positions.
IV. Complete the accounting career chain.
Promotion
V. The following sentences have mistakes. Correct them.
Persons completing high school accounting study may get jobs as accountants.
The second career ladder step is bookkeepers.
There are similar standards that persons must meet to earn the CPA in all states.
The Certified Public Accountant designation isn’t important to professional accountants.
General office clerks are known as accounting professionals.
VI. Find the correct translation of the following sentences.
The purpose of accounting is to provide information about the economic affairs of an organization.
Accounting information is used by the organization's managers, owners, lenders, employees, governmental bodies, customers.
Accounting information helps to plan and control the organization's operations to determine how much tax the organization must pay.
Accounting provides information through the maintenance of files of data, analysis and interpretation of these data.
Бухгалтерская информация используется управляющими организации, владельцами, кредиторами, служащими, правительственными органами, потребителями.
Учетная информация помогает планировать и контролировать действия организации, определить, сколько налогов должна платить организация.
Бухгалтерский учет обеспечивает информацией посредством записей данных, анализа и объяснения этих данных.
Цель бухгалтерского учета - обеспечить информацией об экономическом состоянии организации.
VII. Using the information from the text
1. Name the jobs obtained by persons with higher school accounting study.
2. Describe the process of promotion in accounting.
VIII. TALKING POINTS.
Read the cases for management decision. Express your own opinion on each case. You may use the following expressions:
In my opinion … - На мою думку…
I am of the same opinion … - Я тієї самої думки …
I think … - Я вважаю, (що) …
I don’t think so … - Я так не думаю …
I’d like to… - Мені хотілося б …
From my point of view … - З моєї точки зору …
I wouldn’t say so … - Я б цього не сказав …
I suppose … - Я гадаю, (що) …
I consider … - Я вважаю, (що) …
Just the contrary … - Навпаки …
Case 1. Michael and Vinney, two high school students, are discussing possible careers they might go into. Michael’s brother graduated from high school last year. His brother obtained an entry-level job as an accounting clerk. Michael says he is to spend the rest of his life as an accounting clerk, like his brother. Michael wants a job supervising other workers. Vinney has the same career objective as Michael. However, he is planning to study high school accounting. Is the reasoning of Michael or Vinney better?
Case 2. Arlene is planning her high school course selections. She would like to do accounting work as a career after she completes high school. For this reason she plans to take two years of high school accounting study. However, she is not planning to take any other business courses. Arlene’s parents suggest that she ought to take a typewriting course. Whose thinking is better in this matter? Explain.
Case 3. Linda Morrison starts a new business. During the first year, Mrs. Morrison sometimes uses the family car for business purposes. All expenses for operating the car are paid by and recorded as expenses of the business. These expenses include license plates, gasoline, oil, tune-up, and new tires. Are Mrs. Morrison’s procedures acceptable? Explain.
IX. Check your grammar.
Form the adjectives with the help of these suffixes. Translate the resulting adjectives.
-ic: economy, base, history, magnet.
-al: digit, direction, experiment, form.
-able: service, sale, reason, value.
-ible: access, convert, convince.
-ive: act, elect, direct, effect.
-ful: gain, use, care, event.
-less: force, job, use, joy.
Make up your own sentences using these words.
X. Check your grammar.
Use the correct verb form.
My friends often (to discuss) possible careers they might go into.
We (to discuss) our future professions now.
Her brother already (to obtain) an entry-level job as an accounting clerk.
All expenses for operating the car usually (to pay) by the company.
Ann (to have) the same career objective as Jane.
He (to record) all the amounts at the end of the week.
She (finish) the college last year.
A new typewriter (to sell) for $600.
|
Grammar: Indefinite Tenses |
Wordlist
|
accounting transaction |
бухгалтерська операція, |
бухгалтерская операция, проводка |
|
accuracy |
точність, правильність |
точность, правильность |
|
budgeting |
складання бюджету |
составление бюджета |
|
closely |
уважно |
внимательно |
|
costing |
підрахунок собівартості |
калькуляция себестоимости |
|
external auditor |
зовнішній аудитор |
внешний аудитор |
|
fairness |
чесність, законність |
честность, законность |
|
identify |
встановлювати дійсність |
устанавливать подлинность |
|
internal auditor |
внутрішній ревізор |
внутренний ревизор |
|
manage |
управляти, керувати, завідувати |
управлять, руководить, заведовать |
|
monitor |
здійснювати поточний контроль |
осуществлять текущий контроль |
|
owe |
заборгувати |
быть должным |
|
own |
володіти, мати |
владеть, иметь |
|
requirement |
вимога |
требование |
|
survive |
виживати, зберігати працездатність |
выживать, сохранять работоспособность |
|
target |
мета, планове завдання |
цель, плановое задание |
|
taxation |
оподаткування |
налогообложение |
|
tax avoidance |
відхилення від оподаткування |
уклонение от налогообложения |
|
tax evasion |
уникнення від сплати податків |
уклонение от уплаты налогов |
Organization, analyze, information, manager, economy, economic, function, planning, controlling, period, collect, role, audit.
II. Read the text and name the main branches of accounting and determine their functions.
The most important branches of accounting are financial accounting, management accounting, auditing and taxation.
Financial accounting is often defined as recording, summarizing and analyzing an organization’s transactions in order to provide useful information for its owners, managers and other stakeholders.
In addition to historical information showing the results of past activities, detailed information will be needed so that management can carry out the functions of:
planning – through the planning process, managers can identify what must be done in order to help to achieve the aims of the firm (examples include budgeting);
controlling – the activities that take place must be managed properly, monitored closely and controlled efficiently;
making decisions – management must focus on how, given a number of alternatives, to select the best course of action so the firm can meet its objectives and targets.
Management is particularly interested in the following:
How much profit has the firm made in a given time period – or, for a non-profit-making organization, how does its income compare with its expenditure?
What does it own, and what does it owe to others?
How likely is it to survive in today’s competitive world?
Management accounting
Unlike financial accounting, management accounting collects and analyses financial information for internal purposes. We have already seen that managers seek to plan, control and make decisions: management accounting provides costing, budgeting and other information to help managers.
|
Financial accounting |
Management accounting |
|
|
is prepared for:
|
external reporting; |
internal use; |
|
is presented: |
in a way dictated by external bodies/legal requirements; |
in a way designed by the firm’s management; |
|
consists of: |
financial information; |
financial and non-financial information; |
|
is concerned with:
|
past data; |
past data and future data. |
Auditing
Once information has been collected and accounts have been prepared, external auditors may be employed to check the fairness and accuracy of these accounts. (For some business organizations, such as limited companies, this is a legal requirement.) The role of these external auditors is to protect the interests of the company’s shareholders. Internal auditors are also found: unlike external auditors, they are employees of the company who will check the company’s various book-keeping and accounting procedures.
Taxation
Accountants may choose to specialize in taxation, seeking to reduce their clients’ tax bills – tax avoidance rather than tax evasion. Clients include sole traders, partners and limited company organizations.
III. Translate the following word combinations.
Financial accounting, analyzing an organization’s transactions, to achieve the aims of the firm, the planning process, to monitor closely, to meet targets, non-profit–making organizations, to survive in competitive world, to check the fairness and accuracy of accounts.
IV. Match the accounting terms with their definitions.
|
1. Management accounting |
a) … records and analyzes an organization’s activities for its owners, managers. |
|
2. Financial accounting |
b) The activities of … must be managed properly and controlled efficiently. |
|
3. Planning |
c) … collects and analyzes financial information for internal purposes. |
|
4. Making decisions |
d) … helps to identify what must be done to achieve the aims of the firm. |
|
5. Controlling |
e) … selects the best course of action so the firm can meet its targets. |
|
6. Taxation |
f) … is recording of an organization’s accounts. |
|
7. Book-keeping |
g) … is seeking to reduce their clients’ tax bills. |
V. Put a word or phrase in the correct place to complete the sentences.
|
internal purposes, analyzing, making decisions, past activities, the planning process, external auditors |
VI. Read and translate the concepts paying attention to the difference between them.
|
Tax avoidance is the (legal) attempt to reduce a client’s tax bill to its absolute minimum. |
Tax evasion is the illegal non–declaration of taxable income. |
VII. Compare financial and management accounting.
Determine what they have in common and what is different.
Complete the table.
|
Management accounting |
|
… |
|
consists of … |
|
Financial accounting |
|
presented … |
|
… |
VIII. Make the following sentences negative.
1. An accountant records and summarizes firm’s activities.
2. Managers have to control the activities efficiently.
3. Useful information was provided to the firm’s owners.
4. The course of action will be selected by the firm’s manager.
5. The auditor checked the company’s accounts.
6. External auditors protect the interests of the company’s shareholders.
IX. Form questions for the sentences of exercise VIII.
Fill in necessary verbs.
1. What ________ an accountant ________?
2. How ________ managers _________ control the activities?
3. What information _________ ________ to the firm’s owners?
4. Who ________ the course of action _______ by?
5. What ________ the auditor _________?
6. Whose interests _________ external auditors ________?
X. Using the information from the text
1. Name and describe three functions of management.
2. Distinguish between:
a) book-keeping and financial accounting;
b) financial accounting and management accounting;
|
Grammar: Perfect Tenses |
Wordlist
|
annual |
щорічний |
ежегодный |
|
appropriate |
виділяти, надавати |
выделять, присваивать |
|
be responsible |
бути відповідальним |
быть ответственным |
|
entrepreneur |
підприємець |
предприниматель |
|
legal existence |
законне існування |
законное существование |
|
limit |
обмеження, межа |
ограничение, предел |
|
limited liability |
обмежена відповідальність |
ограниченная ответственность |
|
partnership |
товариство, компанія |
товарищество, компания |
|
run the company |
керувати компанією |
управлять компанией |
|
sole trader |
одноособовий торговець |
единоличный торговец |
|
unincorporated business |
неакціонерна компанія |
неакционерная компания |
I. Read the text and determine the main features of unincorporated businesses.
The main types of organizations in the UK economy are found in the private and public sectors.
UK economy
|
Private sector |
Public sector |
|||||||||||||
|
Sole traders |
Partnerships |
Companies |
Other forms, e.g. cooperatives |
Public corporations and nationalized industries |
Local authorities |
State services, e.g. education |
||||||||
|
Limited |
PLC |
|||||||||||||
Private sector firms are owned by individuals, rather than by the state, and these owners – entrepreneurs – seek to make profit by producing and selling their goods and services.
Sole traders and partnerships
A typical example of a sole trader is the traditional "corner shop". Partnerships are again traditionally associated with the professions, such as accountants and lawyers. Many people can be employed by a sole trader organization: the term “sole” refers to the fact that there is a single owner. Sole traders and partnerships are examples of unincorporated businesses. The key features of unincorporated businesses are that:
These firms have no separate legal existence from their owner(s). the firms cannot enter into contracts in their own name, and the owners are responsible for business debts.
There is unlimited liability for these business debts.
Unlimited liability means that the owners of a business have to use their personal wealth to meet any business debts that cannot be paid from their firm’s resources.
The main difference in accounting terms is how profit is dealt with. With a sole trader, there is no problem – one person, one profit. With a partnership, however, this single profit must be appropriated-shared out-between (at least) two partners.
Another feature affecting the accounts is that the death or retirement of an existing partner, or the introduction of a new partner, means that the existing partnership ends.
Limited companies
Unlike sole traders and partnerships, limited companies have a separate legal existence from that of their owners (shareholders): the company can take, and defend, legal actions in its own name. Its shareholders also have the benefit of limited liability.
Limited liability means that owners of a company can only lose the amount they have invested (or have agreed to invest) in the company.
With companies there tends to be a separation of ownership and control. Unlike sole trades and partnerships, where the owners normally run the business themselves, the shareholders of a limited company elect directors (at the AGM – annual general meeting) who then delegate by appointing managers to run the company on a day-to-day basis.
The two classes of company are private, with the word ’limited’ or ‘ltd’ at the end of their name, and public, with ‘public limited company’ or ‘plc’ at the end of their name. As their name suggests, PLCs can invite the public to invest in their shares.
II. Answer the questions.
1. What sectors are found in the UK economy?
2. Who are private sector firms owned by?
3. What are the key features of unincorporated businesses?
4. What does unlimited liability mean?
5. What is the difference between limited and unlimited liability?
6. Who run the business in a limited company?
7. What does the name “public limited company” mean?
III. What meaning have the following words and word combinations?
Incorporated business, limited liability, private sector, entrepreneur, partnership, sole trader organization, legal existence, business debts, firm’s resources, retirement of an existing partner, separation of ownership and control, annual general meeting.
IV. Match each concept with its definition.
|
a) has no separate legal existence from its owners. b) the profit belongs to a single owner. c) means that owners of a company can only lose the amount they have invested. d) is owned by individuals, entrepreneurs. e) means that owners of a business have to use their personal wealth to meet debts, that cannot be paid from their firm’s resources. f) can invite the public to invest in their shares. g) seeks to make profit by producing and selling goods and services. |
V. Complete the table using the information from the text.
Explain the difference between limited and unlimited liability.
|
Limited liability |
Unlimited liability |
|
a) … a separate legal existence … |
a) … |
|
|
b) … |
b) … for business debts |
|
|
c) … |
c) … run the business themselves |
VI. Put a word or phrase in the correct place to complete the following sentences.
|
a single owner, companies, run the business, business debts, entrepreneurs, a limited company. |
The owners of unincorporated business are responsible for …
The term “sole” refers to the fact that there is …
Private sector firms are owned by …
Ownership and control are separated in …
The owners of partnerships normally …
The shareholders of … elect directors, who appoint managers to run the company.
VII. Rewrite the following sentences replacing the words underlined with the expressions from the text which have similar meanings.
Many people can get a job in a sole trade organization.
The owners are responsible for the firm’s debts.
The profit must be shared out between (at least) two partners.
The owners often manage the business themselves.
Entrepreneurs gain income by producing and selling goods and services.
VIII. Check your grammar.
Translate the sentences paying attention to the usage of Perfect Tenses.
We have already learned main braches of accounting.
Some people have been employed by the firm.
Has he made any profit? – Yes, he has.
Mr Black has invested some amount in the company.
Have you ever analyzed financial information? – Never.
The best course of action has been selected by the firm.
IX. Give at least two examples from your own experience of:
a) sole traders;
b) partnership;
c) private limited companies (“ltd”);
d) public limited companies.
|
Grammar: the verbs 'should', 'would' |
Wordlist
|
adaptability |
пристосовування |
приспособляемость |
|
assess |
оцінювати, визначати розмір |
оценивать, определять размер |
|
assets |
активи, капітал |
активы, капитал |
|
balance sheet |
баланс, балансовий звіт, балансовий рахунок |
баланс, балансовый отчет, балансовый счет |
|
cash flow |
потік/рух готівки |
поток/движение денежных средств |
|
cash flow statement |
звіт про рух готівки |
отчет о движении денежных средств |
|
cease |
припиняти |
прекращать |
|
closure |
закриття |
закрытие |
|
evaluate |
оцінювати, встановлювати вартість |
оценивать, устанавливать стоимость |
|
likelihood |
імовірність |
вероятность |
|
likely return on investments |
імовірний прибуток на інвестований капітал |
вероятная прибыль на инвестированный капитал |
|
liquidity |
ліквідність |
ликвидность |
|
loan |
позика, кредит |
заем, ссуда, кредит |
|
point |
головне, суть, перевага |
главное, суть, преимущество |
|
profit |
прибуток, доход |
прибыль, доход |
|
profit and loss account |
звіт про доходи і втрати, фінансовий звіт |
отчет о прибылях и убытках, отчет о финансовых результатах |
|
profitability |
рентабельність, прибутковість |
рентабельность, прибыльность |
|
stewardship |
керування |
управление |
I. Guess the meaning of the following international words.
Financial position, investor, public, firm, agency, analyst, business, press, resources, nature, credit, liquidity, balance.
II. Read the text, name the users of financial information and say what they are interested in.
The main point of preparing accounts – and in particular the ‘final accounts’ – is so that people can make judgments about the financial position and performance of the firm. There is a number of different users of this financial information: some of them are internal to the firm, though most are external to it.
Managers, employees and in some cases such as sole traders or investors are internal to the business, and the rest are external.
The figure provides a summary of the main users of financial information.
Lenders Investors Managers
Suppliers The firm’s Public
financial information
Employees Customers
Government Analysts
agencies
The profit and loss account provides information on the financial performance of a business in terms of its income and expenditure. External users are interested in the firm’s profit level and its profitability. Investors want to know the likely return on their investment. Government agencies are interested in individual firms’ profit levels (for taxation purposes) and the country’s overall economic performance (national statistics). Analysts in the financial press report on, and the public (who are often potential investors) read about, a PLC’s profits and profitability. Internally, management will be judged partly on profits, and the job security of employees also depends partly on profit levels.
Profit is a statement of what the firm has ‘made’: it is the difference between the firm’s income and its expenditure. Profitability is a better measure of success and efficiency because it compares the amount of profit made with the resources used in making that profit. It’s vital that you use the term ‘profit’ and ‘profitability’ appropriately, especially when you are describing and analyzing an organization’s financial performance.
The balance sheet summarizes the financial position of a business at a particular point in time, i. e. what it owns as assets and what it owes in the form of liabilities. Suppliers and other investors will evaluate the nature, quality and age of the firm’s assets, e. g. to ensure any credit given or loans made have suitable ‘security’. Customers, investors and financial analysts – and, internally, managers and employees – will all be interested in the state of the firm’s financial health as shown by the balance sheet.
The cash flow statement provides information on the firm’s cash movements. Owners, other investors and suppliers are particularly interested in the organization’s liquidity, wanting to check the likelihood that they will be able to get their money back if the organization ceases to operate. Internally, managers and employees also wish to assess liquidity because it is a good measure of the survival prospects of the firm: poor cash flow often leads to business closure.
A firm’s liquidity is a measure of its ability to meet its debts as these debts become due for payment. A firm’s liquidity is a more important guide than its profitability when assessing its chances of survival in the marketplace. All users of financial statements need information on financial position, performance and adaptability.
|
Key term: |
POSITION |
PERFORMANCE |
ADAPTABILITY |
|
Key statement: |
Balance sheet |
Profit and loss account |
Balance sheet |
|
Cash flow statement |
Cash flow statement |
Profit and loss account |
|
|
Cash flow statement |
Financial adaptability refers to how well an organization can adapt to key changes in the economic environment in which it operates.
Financial statements also illustrate the results of the managers’ stewardship of the business. The stewardship of a business refers to how efficient managers are in using the resources they have been given by the owners.
III. Answer the questions.
1. What is the main point of preparing accounts?
2. Who are the users of financial information?
3. What do investors want to know?
4. Who is interested in individual firms' profit levels?
5. What is a firm’s liquidity?
6. Why are owners particularly interested in the organization’s liquidity?
7. Why do managers and employees also wish to assess liquidity?
8. What illustrates the results of the manager’s stewardship of the business?
IV. Match the following concepts with their definitions.
Translate them.
|
1. Profit
2. Profitability 3. Liquidity 4. Stewardship 5. Financial adaptability |
a) …compares the amount of profit made with resources used in making that profit. b) … refers to how well an organization can adapt to key changes in the economic development. c) … refers to how efficient managers are in using the resources of the owners. d) … is the difference between the firm’s income and its expenditure. e) … is a measure of a firm’s ability to meet its debts as these debts become due for payment. |
V. Put a word or phrase in the correct place to complete the sentences.
|
the firm’s assets, liquidity, profit levels, profitability, business closure, adaptability. |
1. External users are interested in the firm’s profit level and …
2. Investors evaluate the nature, quality and age of …
3. … is a good measure of the survival prospects of the firm.
4. Poor cash flow often leads to …
5. All users of financial statements need information on financial position, performance and …
6. Government agencies are interested in individual firms' …
VI. Complete the table to show how external users make use of financial statements to assess the stewardship of management.
|
Example of external users |
Example of use |
|
Share holders |
To evaluate their likely or actual return on the shares invested in the company |
|
Government |
|
|
Lenders |
|
|
Analysts |
|
|
Public |
VII. Check your grammar.
Fill in the gaps with necessary prepositions.
|
in of with on to for between |
1. It’s important for investors to know the likely return … their investment.
2. The public are interested … a firm’s profitability.
3. Profitability is a measure … success and efficiency.
4. Poor cash leads … business closure.
5. Government agencies evaluate firms' profit levels … taxation purposes.
6. The difference … the firm’s income and its expenditure is profit.
7. Comparing the amount of profit … the resources used in making that profit is profitability.
VIII. Check your grammar.
State the function of the verbs “should” and “would” and translate the sentences.
IX. Using the information from the text
Part I
|
Grammar: the Gerund |
Wordlist
|
accounting cycle |
обліковий цикл |
учетный цикл |
|
accounts payable |
кредиторська заборгованість |
кредиторская задолженность |
|
assemble |
збирати |
собирать |
|
assign |
визначати, закріплювати |
определять, закреплять |
|
capture |
охоплювати |
охватывать |
|
cause |
визивати, спричиняти, причина |
вызывать, быть причиной |
|
credit (“Cr”) |
кредит, кредитова сторона рахунку |
кредит, кредитовая сторона счета |
|
cumulative |
сукупний, накопичений |
совокупный, накопленный |
|
debit (“Dr”) |
дебет, дебетова сторона рахунку |
дебет, дебетовая сторона счета |
|
effect |
дія, вплив |
действие, влияние |
|
event |
подія (господарчого життя) |
событие (хозяйственной жизни) |
|
expense accounts |
витратні рахунки |
расходные счета |
|
in excess of |
понад, більш ніж |
сверх, больше чем |
|
involve |
включати в себе, передбачати |
включать в себя, предполагать |
|
general journal |
бухгалтерський журнал |
бухгалтерский журнал |
|
general ledger |
головна книга бухгалтерського обліку |
главная книга бухгалтерского учета |
|
maintain |
зберігати, містити |
сохранять, содержать |
|
source document |
первинний документ |
первичный документ |
|
transfer |
акт перенесення, записувати, відраховувати |
акт перенесения, записывать, отчислять |
|
trial balance |
пробний баланс |
пробный баланс |
I. Read the text and describe the first two steps in the accounting cycle.
The accounting cycle is usually defined as the formal process by which companies record accounting information, transfer it to specific accounts, and assemble it for the preparation of financial statements.
|
1 Analyze source documents (sales slips, travel records, etc.) |
2 Record transactions in journal |
3 Transfer (post) journal entries to ledger |
4 Take a trial balance |
5 Prepare income statement and balance sheet |
6 Analyze financial statements |
The first two steps in the cycle are called the gen eral journal and the general ledger. These records are often referred to as the books of the business, a term that has its origin in the past when virtually all journals and ledgers consisted of sheets of paper that were found together in a book format. Although this is not always true today, especially with computerized ac counting systems, accounting records are still generally referred to as the books of the business.
Accountants must identify and analyze accounting events, and then record them in a way that enables users to determine the cause and effect of each individual event. This is the first step in the cycle.
To capture both the cause and effect of the event, the accounts to be debited and credited are initially recorded (or journalized) in a general journal as illustrated in the Figure Part (a). This journal is a chronological record of accounting events, and includes a place to record the date of the transaction, the account titles to be debited and credited, as well as room for a brief explanation which generally includes a description of the event being journalized and any calculations involved, as well as the initials of the individual who prepared the journal entry. The preparer’s initials are helpful in identifying and assigning responsibility for any errors that may be made in the recording process.
There are two separate columns for the amount of the debit and credit entries.
The Figure Part (a) shows the journal entry to record the purchase of $250 of supplies on account. Accounts to be debited are always listed first, followed by accounts to be credited. Also, although this is not always the case, names of accounts to be debited are usually listed to the left of the names of accounts to be credited, in keeping with the notion that debits belong on the left and credits on the right side of an account. The entry gives a clear and complete picture of the transaction for future reference, but each entry in the journal shows only the effect of the individual transaction. It does not show the resulting balance of the Supplies or Accounts Payable accounts needed for the preparation of reports. That is the role of the general ledger.
The general ledger is the place where all accounts are maintained. If prepared manually, a general ledger usually includes a separate page for each account. In a computerized accounting system, each account might be maintained in a separate data file. Refer to the Figure Part (b), which shows what these accounts might look like.
The general ledger includes a column to record the date of the transaction, a column for an explanation, a reference column, debit and credit columns, and a final column to show the cumulative balance in the account.
The normal balance of any account is a positive balance, and is therefore determined by the type of entry-debit or credit-made to increase that account. For all asset and expense accounts, the normal balance is a debit balance, indicating that cumulative debit entries to that account exceed cumulative credit entries. For all liability, revenue, and owners’ equity accounts, the normal balance is a credit balance, resulting from cumulative credits in excess of total debits. If the balance is negative, it will be shown in brackets.
|
General Journal |
|||||
|
Date |
Account Titles and Explanation |
Ref. |
Debit |
Credit |
|
|
1997 |
|||||
|
Sep. 15 |
Supplies |
109 |
250 |
||
|
Accounts Payable |
204 |
250 |
|||
|
To record of supplies on account. |
|||||
|
Part (b) General Ledger |
|||||
|
Account Name: Supplies |
|||||
|
Date |
Explanation |
Ref. |
Debit |
Credit |
Balance |
|
1997 |
|||||
|
Aug. 12 |
GJ1 |
300 |
300 |
||
|
Aug. 31 |
GJ2 |
275 |
25 |
||
|
Sep. 15 |
GJ3 |
250 |
275 |
||
|
Account Name: Accounts Payable |
|||||
|
Date |
Explanation |
Ref. |
Debit |
Credit |
Balance |
|
1997 |
|||||
|
Aug. 10 |
GJ1 |
500 |
500 |
||
|
Aug. 20 |
GJ1 |
500 |
-0- |
||
|
Sep. 15 |
GJ3 |
250 |
250 |
II. Re-read the text to find the answers to these questions.
1. What is the accounting cycle?
2. How are the general journal and the general ledger called?
3. When do accountants record accounting events?
4. Where are the accounts initially recorded?
5. Why are the preparer’s initials helpful?
6. How are the accounts to be debited and the accounts to be credited listed?
7. What does a general ledger usually include?
8. What is the normal balance?
III. What meaning have the following word combinations in the text?
The accounting cycle, the general journal, the general ledger, debit and credit entries, accounting events, the date of the transaction, a brief explanation, the journal entry, cause and effect, accounts payable, the cumulative balance, the normal balance.
IV. Match the terms on the left with the statements on the right.
3. Debit 4.Credit 5. Accounting event
6. Accounting cycle |
a) …is the record of all a company’s accounts. b) …is any amount entered on the left-hand side of an account. c) … is a chronological record of the accounting events which shows the debit and credit sides of each accounting event. d) … is a formal process by which companies record accounting information, transfer it to specific accounts, and assemble it in financial documents. e) … is an economic event that is specific to the entity and changes the entity’s rights or obligations. f) … is any amount entered on the right-hand side of an account. |
V. Put a word combination in the correct place to complete the following sentences.
|
specific accounts, the books of the business, accounting events, debit and credit entries, the general ledger, a positive balance |
1. After a company records accounting information it is transferred to …
2. The general journal and the general ledger are called …
3. The general journal is a chronological record of …
4. There are two separate columns for the amount of…
5. The role of … is to show the resulting balance of accounts needed for the preparation of reports.
6. The normal balance of any account is …, a debit balance, indicating that cumulative debit entries to that account exceed cumulative credit entries.
VI. Read the text and say what a trial balance is prepared for.
If the debit part of a journal entry was posted properly to its general ledger account, but the credit side was not posted or the wrong amount was posted, the whole equation would be out of balance. To help to discover this type of error prior to the preparation of financial statements, companies prepare a trial balance. It is an internal document, so, unlike financial statements that are prepared for external users in specific formats, there is no requirement that it be prepared in any particular format. However, the trial balance will generally show the account balances in the general ledger in two separate columns – one for debit balances and one for credit balances. Each of these two columns is totaled1 to check for equality.
A trial balance only proves equality of debits and credits. It does not guarantee that the correct accounts have been debited and credited, nor does it help to locate required journal entries that were never made.
It is possible to prepare financial statements directly from a trial balance.
NOTE
1. is totaled – подсчитывается
VII. Check your grammar.
State the form and function of the Gerund in the following sentences.
VIII. Using the information from the text
|
Grammar: Adverbs |
Wordlist
|
cash available |
наявність готівки |
наличие денежных средств |
|
equity |
акція |
акция |
|
entry |
запис, проводка, занесення |
запись, проводка, занесение |
|
financial statements |
фінансова/бухгалтерська звітність |
финансовая/бухгалтерская отчетность |
|
imply |
підозрювати, припускати |
подразумевать, предполагать |
|
keep cash on hand |
мати готівку в розпорядженні |
иметь наличные средства в распоряжении |
|
liability |
зобов'язання, пасив, відповідальність |
обязательство, пассив, ответственность |
|
occur |
відбуватися, траплятися |
происходить, случаться |
|
property |
майно, нерухомість, власність |
имущество, недвижимость, собственность |
|
sales slip |
касовий чек |
кассовый чек |
|
source document |
первинний документ |
первичный документ |
I. Read the text and name the main financial statements.
After the analysis of the transactions is completed the results of this analysis are presented in financial statements.
Four key financial statements are the following: the balance sheet, the income statement, the statement of cash flows, and the statement of owner's equity.
Financial statements provide the link between accounting and the finance. An accountant’s work is pretty much done when he or she prepares and analyzes the financial statements. That is where finance begins. The accountant or finance person’s job is to analyze those statements and make recommendations to top management. Naturally, accountants and finance managers may work together to help to interpret the firm’s data and make recommendations. A financial statement is merely the summary of all transactions that have occurred over a particular period. Financial statements indicate the financial health of the firm. That is why they are of interest to stockholders (the owners of the firm); banks and bondholders (people who have loaned money to the firm); investors (people who may want to own part of the firm); unions; employees.
To understand accounting, you must be able to read and understand both the balance sheet and the income statement. There is one more financial statement that is critically important: the statement of cash flows. That statement helps managers to see what the sources of cash are and where cash is spent. The idea, remember, is to have cash available when you need it. The statement of changes in cash flows helps managers to understand where cash is going so that they can keep more cash on hand. Some people say that cash flow statements are more important than the balance sheet and income statement. The truth is that all three statements are very important to all organizations.
A balance sheet is the financial statement that reports the financial condition of a firm at a specific time. It is composed of assets, liabilities, and owners’ equity. Note that the income statement reports on changes over a period of time and the balance sheet reports financial conditions at a specific point in time.
The words balance sheet imply that the report shows a balance, an equality between two figures. That is, the balance sheet shows a balance between assets on the one hand, and liabilities plus owners’ equity on the other. The following analogy will explain the idea of the balance sheet.
Let’s say that you want to know what your financial condition is at a given point in time. May be you want to buy a new house or car and need to calculate the resources you have available to buy these things. First, you would add up everything you own – cash, property, money people owe you, and so forth. Subtract from that the money you owe others (for example, credit card debt) and you have a figure that tells you that, as of today, you are worth so much.
II. Answer the questions:
1. What do financial statements provide?
2. Why may accountants and finance managers work together?
3. What is a financial statement?
4. What are the main financial statements?
5. What is the difference between the balance sheet and the income statement?
6. What balance is shown in the balance sheet?
7. What document shows what the sources of cash are and where cash is spent?
III. What meaning have the following word combinations in the text?
Financial statement, top management, the firm’s data, the summary of transactions, a particular period, the financial health of the firm, the balance sheet, the income statement, the statement of cash flows, assets and liabilities, owner’s equity, cash available, credit card debt.
IV. Complete each sentence with a word or phrase from the text.
1. A financial statement is … of all transactions that have occurred over a particular period.
2. Financial statements indicate … of the firm.
3. … helps managers to see what the sources of cash are where cash is spent.
4. The balance sheet reports the financial condition of a firm at …
5. … is composed of assets, liabilities and owners’ equity.
6. The income statement reports on changes …
V. Match each term with its explanation.
|
1. Financial statement 2. Balance sheet 3. Income statement 4. Statement of cash flows 5. Statement of owner's equity |
a) … shows what the sources of cash are where cash is spent. b) … shows a balance between assets on the one hand, and liabilities plus owners’ equity on the other. c) … reports on changes over a period of time. d) … indicates the financial health of the firm. e) …presents changes in the owner's equity during a specific time period. |
VI. Checking facts and ideas. Decide if these statements are true or false.
1. External users are interested in the firm’s profit level and its profitability.
2. The balance sheet provides information on the firm’s cash movements.
3. The income statement provides information on the financial performance of a business in terms of its income and expenditure.
4. Profitability is the difference between the firm’s income and expenditure.
5. The balance sheet shows a balance between assets and liabilities plus owners’ equity.
VII. Read the text and explain what the accounting equations mean.
The fundamental accounting equation
Imagine that you don’t owe anybody any money. That is, you don’t have any liabilities. Then the assets you have (cash and so forth) are equal to what you own (equity). Translated into business terms, you have a fundamental accounting equation that is rather obvious. If a firm has no debts, than:
Assets = Owners’ equity
This means that the owners of a firm own everything. If a firm has debts, the owners own everything except the money due others, or:
Assets – Liabilities = Owners’ equity
If you add an equal amount to both sides of the equation (you remember this operation from algebra), you get a new formula:
Assets = Liabilities + Owners’ equity
This last formula is the basis for the balance sheet.
VIII. Check your grammar.
Choose the correct adverbs from the box given below to put into the blanks in the following sentences.
|
finally consistently approximately properly successfully currently only |
1. _________, stable economic growth in Britain is one of the most rapid in Europe.
2. ___________, more than 8,000 international enterprises operate in France.
3. Foreign businesses can’t operate _______ if they are not ______ registered.
4. Britain ________ improves and simplifies its legal base.
5. We ______ completed the initial stage of business undertakings.
6. The expenses would amount to ______ EUR 700.
IX. Translate the text in the written form.
Assets
Assets are what a business owns, but they are also more than that. Assets include productive items (such as equipment, buildings, land, furniture) that contribute to generating income, as well as intangibles1of value such as patents or copyrights.
Assets are listed according to their liquidity. Liquidity refers to how fast an asset can be reconverted to cash. For example, land is considered highly non-liquid because it takes much time and paperwork to sell land. On the other hand, stock is considered highly liquid because it can be sold within minutes.
Based on liquidity, assets are divided into three categories:
1. Current assets2- items that can be converted to cash within one year.
2. Fixed assets – items such as land, buildings, and fixtures that are relatively permanent.
3. Intangible assets – items such as patents, copyrights (that have no real physical form).
Notes
1. intangibles- нематериальные активы
2. current assets – оборотные средства
X. Using the information from the text
1. Name the three main financial documents.
2. Explain the difference between the balance sheet and the income statement.
3. Prove that the statement of cash flow is an important financial statement.
|
Grammar: Participles |
Wordlist
|
accounts receivable |
рахунки дебіторів |
счета дебиторов |
|
amount |
сума, кількість; дорівнювати |
сумма, количество, составлять (сумму) |
|
bond |
облігація, тривале зобов’язання |
облигация, долговое обязательство |
|
current assets |
оборотні кошти |
оборотные средства |
|
current liabilities |
короткотермінова заборгованість, що має бути повернена на протязі року |
краткосрочная задолженность, подлежащая возврату в течение года |
|
deferred taxes |
відстрочені податкові платежі |
отсроченные налоговые платежи |
|
fixed assets |
довготермінові активи |
долгосрочные активы |
|
inevitably |
неминучо |
неизбежно |
|
lender |
кредитор |
кредитор, заимодавец |
|
lodge |
подати, пред’являти |
подать, предъявлять |
|
net assets |
нетто-активи; активи, зменшені на суму привернутих коштів |
нетто-активы; активы, уменьшенные на сумму привлеченных средств |
|
on … behalf |
від імені |
от имени |
|
retained earnings |
нерозподілений прибуток |
нераспределенная прибыль |
|
total assets |
загальна вартість активів |
общая стоимость активов |
|
wages payable |
заборгованість по заробітній платні |
задолженность по заработной плате |
|
working capital |
власні оборотні кошти |
собственные оборотные средства |
I. Read the text and describe the major sections of the balance sheet.
A balance sheet describes the resources that are under a company’s control on a specified date and indicates where these resources have come from. It consists of three major sections: (1) the assets: valuable rights owned by the company: (2) the liabilities: the funds that have been provided by outside lenders and other creditors in exchange for the company’s promise to make payments or to provide services in the future; and (3) the owners’ equity: the funds that have been provided by the company’s owners or on their behalf.
The list of assets shows the forms in which the company’s resources are lodged; the lists of liabilities and the owners’ equity indicate where these same resources have come from. The balance sheet, in other words, shows the company’s resources from two points of view, and the following relationship must always exist: total assets equal total liabilities plus total owners’ equity. This formula is the basis for balance sheet.
This same identity is also expressed in another way: total assets minus total liabilities equals total owners’ equity. In this form, the equation emphasizes that the owners’ equity in the company is always equal to the net assets (assets minus liabilities). Any increase in one will inevitably be accompanied by an increase in the other, and the only way to increase the owners’ equity is to increase the net assets.
Assets are ordinarily subdivided into current assets and noncurrent assets. The former include cash, amounts receivable from customers, inventories, and other assets that are expected to be consumed or can be readily converted into cash during the next operating cycle (production, sale, and collection). Noncurrent assets may include noncurrent receivables, fixed assets (such as land and buildings), and long-term investments.
The liabilities are similarly divided into current liabilities and noncurrent liabilities. Most amounts payable to the company’s suppliers (accounts payable), to employees (wages payable), or to governments (taxes payable) are included among the current liabilities. Noncurrent liabilities consist mainly of amounts payable to holders of the company’s long-term bonds and such items as obligations to employees under company pension plans. The difference between total current assets and total current liabilities is known as net current assets, or working capital. A simple balance sheet is shown in Table 1.
Table 1: Any Company, Inc.: Balance Sheet as of Dec. 31, 20___
assets liabilities and owners’ equity
Current assets Current liabilities
Cash $ 100 Wages payable $ 20
Marketable securities 50 Accounts payable 160
Inventories 180 Total current liabilities $ 180
Total current assets $ 480 Deferred taxes 10
Long-term bonds payable 70
Total liabilities $ 260
Long-term investments 70 Owners’ equity
Plant and equipment Common stock $ 100
Original cost $ 300 Additional paid-in capital 150
Less: accumulated 110 190 Retained earnings 230
depreciation Total owners’ equity 480
Total assets $ 740
Total liabilities and $ 740
owners’ equity
II. Re-read the text to find the answers to these questions.
1. What does a balance sheet describe?
2. How many major sections does it consist of? What are they?
3. How are valuable rights owned by the company called?
4. What are the liabilities?
5. The funds that have been provided by the company’s owners or on their behalf are the owners’ equity, aren’t they?
6. What does the list of assets show?
7. How are assets subdivided?
8. What do current assets include?
9. What may noncurrent assets include?
10. How are the liabilities divided?
11. What is working capital?
III. What meaning have the following word combinations in the text?
To be under a company’s control; owned by the company; to make payments; to provide services; to be lodged; to show the company’s resources; to be expressed; to be equal; to be accompanied; to increase the net assets; to be subdivided; to be consumed; to be converted; to consist; to be known.
IV. Match each concept with its definition.
|
1.Total assets 2.Assets 3. Liabilities 4. Current assets 5. Current liabilities 6. The owners’ equity |
a) …the funds that have been provided by outside lenders b) …include cash, amounts receivable from customers, inventories c) … the funds that have been provided by the company’s owners d) … equal total liabilities plus total owners’ equity e) …valuable rights owned by the company f) … most amounts payable to the company’s suppliers, to the employees, or to governments |
V. Put a word or phrase in the correct place to complete the following sentences.
|
the owners’ equity, current assets, net assets, under a company’s control, total assets, working capital |
1. A balance sheet describes the resources that are …
2. A balance sheet consists of three major sections: the assets, the liabilities and …
3. … equal total liabilities plus total owners’ equity.
4. Assets are subdivided into … and noncurrent assets.
5. The only way to increase the owner’s equity is to increase…
6. The difference between total assets and total current liabilities is known as…
VI. Look back at the text and choose the corrects words to go together.
the resources that are under/at a company’s control
valuable rights owned of/by the company
the funds provided on/by the company’s owners’ behalf
be equal for/to the net assets
be subdivided for/into current and noncurrent assets
be expressed in/at another way
amounts payable for/to employees
VII. Rewrite the following sentences replacing the words underlined with the expressions from the text which have similar meanings.
VIII. Word building.
Form nouns with the suffixes –er /-or. Translate the resulting nouns.
To report, to invest, to manage, to indicate, to own, to lend, to provide, credit, to divide, to invent, to receive, to consume, to operate, to produce, to collect, to sell, to supply, to govern, to employ, to work.
IX. Check your grammar.
Fill in the gaps with the Participle I or Participle II. Explain your choice.
X. Translate the text in the written form.
Give the title for it.
The owners' equity of an American company is divided between paid-in capital and retained earnings. Paid-in capital represents the amounts paid to the corporation in exchange for shares of the company’s preferred and common stock. The major part of this, the capital paid in by the common shareholders, is usually divided into two parts, one representing the par value1, or stated value2, of the shares, the other representing the excess over this amount. The amount of retained earnings is the difference between the amounts earned by the company in the past and the dividends that have been distributed to the owners.
A slightly different breakdown3 of the owners’ equity is used in most of continental Europe and in other parts of the world. The classification distinguishes between those amounts that cannot be distributed except as part of a formal liquidation of all or part of the company (capital and legal reserves) and those amounts that are not restricted in this way (free reserves and undistributed profits).
NOTES
1. par value – номинальная стоимость
2. stated value – объявленная стоимость
3. breakdown – распределение, разбивка (здесь)
XI. Using the information from the text
1. Describe the sections of the balance sheet.
2. Distinguish between the list of assets and the list of liabilities.
|
Grammar: the verbs 'to have', 'to be' |
Wordlist
|
effect |
вплив, дія |
влияние, воздействие |
|
expenses |
витрати |
расходы, затраты |
|
decline |
спад, зменшення |
падение, снижение, сокращение |
|
depreciation |
знецінювання, амортизація, зниження вартості |
обесценивание, амортизация, снижение стоимости |
|
derive |
одержувати, отримувати |
получать, извлекать |
|
growth |
збільшення, зростання |
рост, увеличение |
|
hold assets |
володіти капіталом |
владеть капиталом |
|
income tax |
податок на прибуток |
подоходный налог |
|
interest expenses |
витрати на виплати відсотків за облігаціями |
затраты на выплату процентов по облигациям |
|
interest revenue |
дохід у вигляді відсотків |
доход в виде процентов |
|
merchandise |
товари |
товары |
|
net gain |
чистий доход |
чистый доход |
|
net income |
чистий прибуток |
чистая прибыль |
|
net loss |
чисті витрати |
чистый убыток |
|
obtain |
одержувати, отримувати |
получать, приобретать |
|
operating income |
виробничий прибуток |
производственная прибыль |
|
provision for income taxes |
резерв для виплати податків на прибуток |
резерв для уплаты налогов на прибыль |
|
stock-in-trade |
запас товарів, обладнання |
запас товаров, оборудование |
|
stock of assets |
запас капіталу |
запас активов (капитала) |
|
total revenues |
загальні прибутки |
общие доходы |
|
withdrawal of funds |
зняття коштів з рахунку |
снятие средств со счета, изъятие |
I. Read the text and tell what the income statement shows.
The company uses its assets to produce goods and services. Its success depends on whether it is wise or lucky in the assets it chooses to hold and in the ways it uses these assets to produce goods and services.
The company’s success is measured by the amount of profit it earns – that is, the growth or decline in its stock of assets from all sources other than contributions or withdrawals of funds by owners and creditors. Net income is the accountant’s term for the amount of profit that is reported for a particular time period.
The company’s income statement for a period of time shows how the net income for that period was derived. For example, the first line in Table 2 shows the company’s net sales revenues for the period: the assets obtained from customers in exchange for the goods and services that constitute the company’s stock-in-trade. The second line summarizes the company’s revenues from other sources.
The income statement next shows the expenses of the period: the assets that were consumed while the revenues were being created. The expenses are usually broken down into several categories indicating what the assets were used for. In Table 2, six expense items are distinguished, starting with the cost of the merchandise that was sold during the period and continuing down through the provision for income taxes.
The bottom portion of the income statement reports the effects of events that are outside the usual flow of activities. In this case it shows the result of the company’s sale of some of its long-term investments for more than their original purchase price. Because this was not part of the company’s normal operations, the sale price, costs, and taxes on the sale were kept separate from the operating revenue and expense totals; the income statement shows only a single number, the net gain on the sale.
Net income summarizes all the gains and losses recognized during the period, including both the results of the company’s normal, day-by-day activities and any other events. If net income is negative, it is referred to as a net loss.
The income statement is usually accompanied by a statement that shows how the company’s retained earnings has changed during the year. Net income increases retained earnings; net operating loss or the distribution of cash dividends reduces it. Any Company started the year with retained earnings of $213 and added $52 in net income during the year (from Table 2). Dividends amounting to $35 were distributed to shareholders during the year, leaving a year-end balance of $230.This is the amount on the year-end balance sheet (Table 1).
Table 2: Any Company, Inc.: Income Statement for the
Year Ended Dec.31, 20___
|
Net sales revenues $800 Interest and other revenues 14 Total revenues $814 Expenses Cost of merchandise sold $492 Salaries of employees 116 Depreciation 30 Interest expense 4 Other expenses 78 Provision for taxes on ordinary income 47 767 Operating income $47 Gain on sale of investment (less applicable income taxes) 5 Net income $52 |
II. Re-read the text to find the answers to these questions.
1. What does the company’s success depend on?
2. How is it measured?
3. What is net income?
4. What does the company’s income statement show?
5. How are the expenses of the period shown?
6. What does the bottom portion of the income statement report?
7. What does net income summarize?
8. What increases retained earnings?
9. What reduces it?
10. When do we speak about a net loss?
III. In the second column select the word combinations equivalent to those in the first one.
|
|
IV. Which words are missing from the following sentences?
V. Make pair of words from upper and lower lists. Translate the resulting word combinations.
VII. Using Table 2 determine what the company’s income statement shows.
VIII. Check your grammar.
Form questions to the following answers.
IX. Check your grammar.
State the functions of the verbs “to have” and “to be”
X. Translate the text in the written form.
Cost of goods sold1
To calculate how much money a business earned by the selling merchandise over the year, you have to subtract how much it spent to buy the merchandise from the sales revenue. That cost includes the purchase price plus any freight charges paid to bring in the goods plus the costs associated with storing the goods. In other words, all the costs of buying and keeping merchandise for sale, including packaging, are included in the cost of goods sold.
When you subtract the cost of goods sold from net sales, you get what is called gross margin2 or gross profit. Gross margin, then, is how much the firm earned by buying and selling merchandise.
In a service firm, there may be no cost of goods sold; therefore, net sales equals gross margin. In a manufacturing firm, we would estimate the cost of goods manufactured3. In either case (selling goods or services), the gross margin or gross profit figure doesn’t tell you enough. What you are really interested in is net profit or net income. To get that, you must subtract expenses.
NOTES
1. cost of goods sold – себестоимость реализованных продуктов
2. gross margin – валовая прибыль
3. cost of goods manufactured – себестоимость произведенной продукции
|
Grammar: Prepositions |
Wordlist
|
accounts receivable |
кредиторська заборгованість |
кредиторская задолженность |
|
accounts payable |
дебіторська заборгованість |
дебиторская задолженность |
|
cash payment |
платіж готівкою |
наличный платеж |
|
consolidated statement |
зведена звітність |
сводная отчетность |
|
financing activities |
фінансова діяльність |
финансовая деятельность |
|
inflow |
приплив, надходження |
приток, поступление |
|
investing activities |
інвестиційна діяльність |
инвестиционная деятельность |
|
issuance of bonds |
випуск облігацій |
выпуск облигаций |
|
monetary assets |
грошові кошти |
денежные средства |
|
operating activities |
основна діяльність |
основная деятельность |
|
sale proceeds |
прибуток від продажу |
выручка от продажи |
|
similarly |
так само, подібним чином |
так же, подобным образом |
|
subtract |
віднімати |
вычитать |
I. Guess the meaning of the following international words.
Company, results, group, invest, finance, category, illustrate, balance, dividend, operation, corporation.
II. Read the text and determine the three major groups of activities cash flows result from.
Companies also prepare a third financial statement, the statement of cash flows. Cash flows result from three major groups of activities: (1) operating activities, (2) investing activities, and (3) financing activities. These three categories are illustrated in Table 3.
This is very different from an income statement. Cash amounting to $19 was received from the sale of the investment; the income statement included only the $5 gain, the difference between the sale proceeds and $14, the amount at which the investment had been shown in the balance sheet before it was sold. Since net income, the top lines in Table 3, included the $5 gain, the company couldn’t include the full net income and the full cash proceeds from the sale of the investment – that would have counted the $5 twice. Instead, any Company subtracted the $5 from net income (line 5 in the table) and reported the full $19 below, under cash from investing activities.
The income statement differs from the cash flow statement in other ways, too. Cash was received from the issuance of bonds and was paid to shareowners as dividends; neither of those figured in the income statement. Cash was also paid to purchase equipment; this added to the plant and equipment asset but was not subtracted from current revenues because it would be used for many years, not just this one.
Cash from operations is not the same as net income (revenues minus expenses). For one thing, not all revenues are collected in cash. Revenue is usually recorded when a customer receives merchandise and either pays for it or promises to pay the company in the future (in which case the revenue is recorded in accounts receivable). Cash from operating activities, on the other hand, reflects the actual cash collected, not the inflow of accounts receivable. Similarly, an expense may be recorded without an actual cash payment.
To avoid the problems faced a firm must plan its cash flow, it has to know what its cash needs will be. By developing a detailed financial plan, management helps to ensure the long-run success of the firm. The firm analyzes all of the cash changes that have occurred from operating, investing, and financing and learns the net change in cash position. The changes in cash flows statement also gives the firm some insight into how to better handle cash so that no cash flow problems occur in the future.
The statement of cash flows shows the flow of cash into and out of a business during a period of time. This statement indicates net cash flow (either inflow or outflow) from operating, investing, and financing activities. Cash flow from operations measures the cash results of the firm’s primary revenue-generating activities.
Table 3: Any Company, Inc.: Statement of Cash Flows
for the Year Ended Dec. 31, 20_____
|
Cash from operating activities: Net income $ 52 Depreciation 30 Deferred taxes 3 Increase in monetary assets other than cash 2 Gain on sale of investment (5) $82 Cash for investing activities: Purchase of equipment $(41) Sale of investment 19 22 Cash from financing activities: Issuance of bonds $10 Cash dividends (35) (25) Increase in cash balance $35 |
III. Answer the questions.
IV. Read and translate the following word combinations.
Depreciation, deferred taxes, gain on sale of investment, purchase of equipment, net income, cash dividends, sale of investment, issuance of bonds, increase in monetary assets other than cash, the long-run success.
V. Using the word combinations of exercise 3 complete the table.
|
Cash from operating activities |
Cash from investing activities |
Cash from financing activities |
|
issuance of bonds |
||
|
sale of investment |
||
|
deferred taxes |
||
VI. Checking facts and ideas.
Decide if these statements are true or false. Correct false statements.
VII. Using Table 3 determine what is recorded in the company’s statement of cash flows.
VIII. Check your grammar.
Fill in the gaps with necessary prepositions.
|
between to in from under without for of |
1. A statement of cash flows is different … an income statement.
2. Cash is paid … shareowners as dividends.
3. The difference … cash and net income is obvious.
4. An expense may be recorded … an actual cash payment.
5. When a customer pays … merchandise or promises to pay the company … the future, revenue is recorded.
6. A balance sheet consists … three major sections.
7. The resources that are … a company’s control are described in a balance sheet.
IX. Read the text and say what consolidated statements reflect and include.
Consolidated Statements.
Most large corporations in the United States and other industrialized countries own other corporations. Their primary financial statements are consolidated statements, reflecting the total assets, liabilities, owners’ equity, net income, and cash flows of all the corporations in the group. Thus, for example, the consolidated balance sheet of the parent corporation1 (the corporation that owns the others) does not list its investments in its subsidiaries2 (the companies it owns) as assets; instead, it includes their assets and liabilities with its own.
Some subsidiary corporations are not wholly owned by the parent; that is, some shares of their common stock are owned by others. The equity of these minority3 shareholders in the subsidiary companies is shown separately on the balance sheet.
NOTES
1. parent corporation – материнская корпорация
2. subsidiaries – дочерние корпорации
3. minority – меньшинство
X. Translate the text in the written form.
Disclosure1 and auditing requirements.
A corporation’s obligations to issue financial statements are prescribed in the company’s own statutes or bylaws2 and in public laws and regulations. The financial statements of most large and medium-size companies in the United States fall primarily within the jurisdiction of the federal Securities and Exchange Commission (SEC)3.
A company’s financial statements are ordinarily prepared initially by its own accountants. Outsiders review, or audit4, the statements and the systems the company used to accumulate the data from which the statements were prepared. In most countries, including the United States, these outside auditors are selected by the company’s shareholders. The audit of a company’s statements is ordinarily performed by professionally qualified, independent accountants.
NOTES
1. disclosure - 1) представление компанией сведений о своей деятельности
2) раскрытие, разглашение
2. bylaws – уставные нормы, постановления местной власти
3. Securities and Exchange Commission (SEC) – Комиссия по ценным бумагам и биржевым операциям
4. audit – 1) проверка, ревизия;
2) заключение аудитора по финансовому отчету
Unit XII
|
Grammar: the Passive Voice |
Wordlist
|
apparent |
очевидний |
очевидный |
|
adopt |
приймати |
принимать |
|
anticipated |
той, що очікується |
ожидаемый |
|
asset value |
номінальна вартість активів компанії |
номинальная стоимость активов компании |
|
cash flow |
потік/рух коштів |
поток/движение средств |
|
deduct |
відраховувати, утримувати |
вычитать, удерживать |
|
delay |
затримувати |
задерживать |
|
exceed |
перевищувати |
превышать |
|
expectation |
очікування |
ожидание |
|
imply |
мати на увазі |
подразумевать |
|
interest at the rate |
ставка проценту |
процентная ставка |
|
interest on the investment |
процент з капіталовкладень |
процент по капиталовложениям |
|
likely |
вірогідно |
вероятно |
|
measurement |
вимірювання, підрахунок, обчислення |
измерение, подсчет, вычисление |
|
timing |
розрахунок часу |
расчет времени |
|
value of assets |
вартість/оцінка/ оцінювання активів |
стоимость/оценка/ оценивание активов |
|
worth |
вартість, цінність |
стоимость, ценность |
|
worthwhile |
вартий |
стоящий |
I. Read the text and say what factors value depends on.
In preparing financial statements, the accountant has several measurement systems to choose from. Assets, for example, may be measured at what they cost in the past or what they could be sold for now, to mention only two possibilities. To enable users to interpret statements with confidence, companies in similar industries should use the same measurement concepts or principles.
One principle that accountants may adopt is to measure assets at their value to their owners. The economic value of an asset is the maximum amount that the company would be willing to pay for it. This amount depends on what the company expects to be able to do with the asset. For business assets, these expectations are usually expressed in terms of forecasts of the inflows of cash the company will receive in the future. If, for example, the company believes that by spending $1 on advertising and other forms of sales promotion it can sell a certain product for $5, then this product is worth $4 to the company.
When cash inflows are expected to be delayed, value is less than the anticipated cash flow. For example, if the company has to pay interest at the rate of 10 percent a year, an investment of $100 in a one-year asset today will not be worthwhile unless it will return at least $110 a year from now ($100 plus 10 percent interest for one year). In this example, $100 is the present value of the right to receive $110 one year later. Present value is the maximum amount the company would be willing to pay for a future inflow of cash after deducting interest on the investment at a specified rate for the time the company has to wait before it receives its cash.
Value, in other words, depends on three factors: (1) the amount of the anticipated future cash flows, (2) their timing, and (3) the interest rate. The lower the expectation, the more distant the timing, or the higher the interest rate, the less valuable the asset will be.
Value may also be represented by the amount the company could obtain by selling its assets. This sale price is seldom a good measure of the assets’ value to the company, however, because few companies are likely to keep many assets that are worth no more to the company than their market value. Continued ownership of an asset implies that its present value to the owner exceeds its market value, which is its apparent value to outsiders.
II. Answer the questions.
III. What meaning have the following words and word combinations?
The economic value of an asset, to measure assets at their value to their owners, in the terms of forecasts of the inflows of cash, to spend money on advertising, the anticipated cash flow, to pay interest at the rate, continued ownership of an asset, to exceed an asset’s market value.
IV. Put a word or phrase in the correct place to complete the following sentences.
|
present value, the interest rate, continued ownership, amount, cash flows, a good measure |
V. Look back at the text and choose the correct words to go together.
measure assets on/at at their value to their owners
economic value of/in an asset
express in/on terms of forecasts
spend money for/on advertising
pay interest at/for the rate of 5 percent a year
deduct interest at/on investment
depend on/at some factors
be represented with/by the amount the company obtains by selling its assets
VI. Translate the text in the written form.
Asset Сost1
Accountants are traditionally reluctant2 to accept value as the basis of asset measurement in the going concern. Although monetary assets such as cash or accounts receivable are usually measured by their value, most other assets are measured at cost. The reason is that the accountant finds it difficult to verify3 the forecasts upon which a generalized value measurement system would have to be based. As a result, the balance sheet does not pretend to show how much the company’s assets are worth; it shows how much the company has invested in them.
The historical cost of an asset is the sum of all the expenditures the company made to acquire4 it. This amount is not always easily measurable. If, for example, a company has built a special-purpose machine in one of its own factories for use in manufacturing other products, and the project required logistical support from all parts of the factory organization, from purchasing to quality control, then a good deal of judgment must be reflected in any estimate of how much of the costs of these logistical activities should be “capitalized” (i.e., placed on the balance sheet) as part of the cost of the machine.
NOTES
1. asset cost – себестоимость (стоимость) активов компании
2. reluctant – неохотно
3. verify – проверять, контролировать
4. acquire – приобретать, получать
VII. Complete the sentences with words or word combinations from the text “Asset Cost”.
1. Monetary assets are usually measured by …
2. Other assets are measured at …
3. The balance sheet shows how much …
4. … is the sum of all the expenditures the company made to acquire it.
5. This amount is not always easily …
6. Accountants are … to accept value as the basis of asset measurement in the going concern.
VIII. Check your grammar. Use the necessary form of the Passive Voice.
IX. Using the information from the text
|
Grammar: Question Structure |
Wordlist
|
approach |
підхід |
подход |
|
bill |
рахунок, пред’являти рахунок |
счет, предъявлять счет |
|
consume |
споживати, витрачати |
потреблять, расходовать |
|
deliver |
доставляти |
поставлять |
|
estimate |
оцінка, кошторис, калькуляція |
оценка, смета, калькуляция |
|
expense estimates |
кошторис витрат |
смета расходов |
|
gross sales |
валова сума продажу |
валовая сумма продаж |
|
injection |
“впорскування” |
“впрыскивание” |
|
judgment |
оцінка, судження |
оценка, суждение |
|
pertain to |
мати відношення до…, належати до… |
иметь отношение к…, принадлежать к … |
|
reject |
відкидати, відхиляти |
отвергать, отклонять |
|
revenue estimates |
кошторис прибутків |
смета доходов |
|
substantiate |
обґрунтовувати |
обосновывать |
|
susceptible |
схильний/той, що піддається |
подверженный/ поддающийся |
|
verification |
перевірка, контроль |
проверка, контроль |
|
wealth |
матеріальні цінності, достаток |
материальные ценности, богатство, изобилие |
I. Read the text and find out what the two sets of estimates required for recognition of income are.
From an economic point of view, income is defined as the change in the company’s wealth during a period of time, from all sources other than the injection or withdrawal of investment funds. Income is the amount the company could consume during the period and still have as much real wealth at the end of the period as it had at the beginning. For example, if the value of the net assets (assets minus liabilities) has gone from $1,000 to $1,200 during a period and dividends of $100 have been distributed, income measured on a value basis would be $300 ($1,200 minus $1,000, plus $100).
Accountants generally have rejected this approach for the same reason that they have found value an unacceptable basis for asset measurement: Such a measure would rely too much on estimates of what will happen in the future, estimates that would not be readily susceptible to independent verification. Instead, accountants have adopted what might be called a transactions approach to income measurement. They recognize as income only those increases in wealth that can be substantiated from data pertaining to actual transactions that have taken place with persons outside the company. In such systems, income is measured when work is performed for an outside customer, when goods are delivered, or when the customer is billed.
Recognition of income at this time requires two sets of estimates: (1) revenue estimates, representing the value of the cash that the company expects to receive from the customer; and (2) expense estimates, representing the resources that have been consumed in the creation of the revenues. Revenue estimation is the easier of the two, but it still requires judgment. The main problem is to estimate the percentage of gross sales for which payment will never be received, either because some customers will not pay their bills ("bad debts") or because they will demand and receive credit for returned merchandise or defective work.
Expense estimates are generally based on the historical cost of the resources consumed. Net income, in other words, is the difference between the value received from the use of resources and the cost of the resources that were consumed in the process. As with asset measurement, the main problem is to estimate what portion of the cost of an asset has been consumed during the period in question.
II. Re-read the text to find the answers to these questions.
1. How is income defined from an economic point of view?
2. What approach to income measurement have accountants adopted?
3. What income do accountants recognize?
4. When is income measured?
5. What two sets of estimates does recognition of income require?
6. What do these estimates represent?
7. What are expense estimates based on?
III. What meaning have the following word combinations?
The company’s wealth, the injection or withdrawal of investment funds, independent verification, a transactions approach to income measurement, an outside customer, revenue estimates, expense estimates, the percentage of gross sales.
IV. Put a word or phrase in the correct place to complete the following sentences.
|
expense estimates, gross sales , transactions, revenue estimates, income, consume, estimates |
1. … is defined as the change in the company’s wealth.
2. Income is the amount the company could … during the period.
3. Asset measurement would rely on … of what will happen in future.
4. Accountants have adopted a … approach to income measurement.
5. … represent the value of the cash the company expects to receive from the customer.
6. … represent the resources that have been consumed in the creation of the revenues.
7. The main problem is to estimate the percentage of … for which payment will never be received.
V. Find the pairs of synonyms.
|
income unpaid bills estimation net assets merchandise customer verification |
calculation revenue assets minus liabilities goods “bad debts” audit buyer |
Make up your own sentences using these words.
VI. Translate the text in the written form.
What are Revenues?
Inflows or other enhancements1 of assets of an entity2 or settlements3 of its liabilities from delivering or producing goods, rendering services are defined as revenues.
For instance, revenue events occur when Boeing sells airplanes, and when Federal Express delivers packages.
Revenues will always increase assets or reduce liabilities. Revenues are recognized when they have been earned and realized. When a company sells goods or provides services and immediately collects cash or has a reasonable expectation of collecting a known amount of cash as a result of the event, revenue recognition occurs.
Consider the following example. If a medical doctor completes an examination4 of a patient and immediately collects a $100 fee, revenue is recognized because it is both earned and realized. However, if the same doctor donates5 his time to a free clinic where he performs the same examination at no charge, does he recognize any revenue? The answer is no.
NOTES
1. enhancement - увеличение
2. entity – организация, объект
3. settlement – уплата, расчет
4. complete an examination – заканчивать осмотр
5. donate - жертвовать
VII. Agree or disagree. Express your own opinion.
When a company sells goods or provides services and immediately collects cash or has a reasonable expectation of collecting a known amount of cash as a result of the event, revenue recognition occurs.
VIII. Check your grammar.
Put the questions to the underlined words.
IX. Using the information from the text
1. Give the definition of “income”.
2. Explain the conditions for recognition of income.
3. Distinguish between revenue estimates and expense estimates.
|
Grammar: Impersonal Sentences |
Wordlist
|
allowance |
знижка, уцінка |
скидка, уценка |
|
anticipate |
чекати, передбачати |
ожидать, предвидеть |
|
available |
наявний, доступний |
наличный, доступный |
|
batch |
партія виробів, замовлення |
партия изделий, заказ |
|
beginning inventory |
запас товарно-матеріальних цінностей на початок року |
запас товарно-материальных ценностей на начало года |
|
declining-charge depreciation |
дeгресивне нараховування |
дeгрессивное начисление износа |
|
ending inventory |
запас товарно-матеріальних цінностей на кінець року |
запас товарно-материальных ценностей на конец года |
|
evidence |
дані, факти, доказ |
данные, факты, доказательство |
|
give up |
відмовлятися |
отказываться |
|
gradually |
поступово |
постепенно |
|
inventory |
інвентаризаційний опис, наявні вироби, запас |
инвентаризационная опись, наличные товары, запас |
|
predict |
завбачати, передрікати |
предсказывать, прогнозировать |
|
reasonable |
розумний, обґрунтований |
разумный, обоснованный |
|
recognize |
визнавати, схвалювати |
признавать, одобрять |
|
straight-line depreciation |
рівномірне нараховування |
равномерное начисление износа |
I. Read the text and try to explain the concepts “straight-line depreciation” and “declining-charge depreciation”.
Some assets give up their services gradually rather than all at once. The cost of the portion of these assets the company uses to produce revenues in any period is that period's depreciation expense, and the amount shown for these assets on the balance sheet is their historical cost less an allowance for depreciation, representing the cost of the portion of the asset's anticipated lifetime services that has already been used. To estimate depreciation, the accountant must predict both how long the asset will continue to provide useful services and how much of its potential to provide these services will be used up in each period.
Depreciation is usually computed by some simple formula. The two most popular formulas in the United States are straight-line depreciation, in which the same amount of depreciation is recognized each year, and declining-charge depreciation, in which more depreciation is recognized during the early years of life than during the later years, on the assumption that the value of the asset's service declines as it gets older.
The role of the independent accountant (the auditor) is to see whether the company's estimates are based on formulas that seem reasonable in the light of whatever evidence is available and whether these formulas are applied consistently from year to year. Again, what is "reasonable" is clearly a matter of judgment.
Depreciation is not the only expense for which more than one measurement principle is available. Another is the cost of goods sold. The cost of goods available for sale in any period is the sum of the cost of the beginning inventory and the cost of goods purchased in that period. This sum then must be divided between the cost of goods sold and the cost of the ending inventory:
Beginning inventory Cost of goods sold
+ = +
Purchases Ending inventory
Accountants can make this division by any of three main inventory costing methods: (1) first in, first out (FIFO) 1, (2) last in, first out (LIFO) 2 or (3) average cost. The LIFO method is widely used in the United States, where it is also an acceptable costing method for income tax purposes; companies in most other countries measure inventory cost and the cost of goods sold by some variant of the FIFO or average cost methods. Average cost is very similar in its results to FIFO.
NOTES:
1. FIFO – first in, first out - метод оценки запасов по ценам последних закупок, правило обслуживания в порядке поступления.
2. LIFO – last in, first out - метод оценки запасов по ценам первых закупок, правило обслуживания в обратном порядке.
II. Answer the questions.
III. What meaning have the following word combinations?
Beginning inventory, ending inventory, declining-charge depreciation, straight-line depreciation, anticipated life-time services, the cost of goods sold, inventory costing method, the oldest batch, income tax, measurement principles.
IV. Put a word or phrase in the correct place to complete the following sentences.
|
goods available, FIFO, LIFO, declining-charge depreciation, costing methods |
1. The two most popular formulas expressing depreciation are straight-line depreciation and …
2. The cost of … for sale is the sum of the cost of the beginning inventory and the cost of goods purchased in the period.
3. There are three main inventory…
4. The … method is widely used in the USA.
5. Under …, the cost of goods is determined by adding the costs of various batches of the goods available, starting with the oldest batch in the beginning inventory until the total number of units equals the number of units sold.
V. Match accounting concepts with their definitions.
|
1. Revenue 2. Cost 3. Net income 4. Asset 5. Cost of goods sold 6. Depreciation expense 7. Inventory |
a) … is the difference between revenue and expense in a certain time period. b) … is the portion of the cost of an asset that is deducted from the revenues of the period. c) … is the amount earned by a company for providing goods and services to customers. d)… is something that requires the use of business resources. e) … is a right to use resources that are expected to have future economic benefits for the entity. f) … is an expense that represent the company’s cost of the products sold to customers. g) … is an asset that the company intends to sell to customers. |
VI. Agree or disagree.
Explain your opinion on each idea.
VII. Read the text and describe the LIFO and the FIFO methods.
Each purchase of goods constitutes a single batch, acquired at a specific price. Under FIFO, the cost of goods sold is determined by adding the costs of various batches of the goods available, starting with the oldest batch in the beginning inventory, continuing with the next oldest batch, and so on until the total number of units equals the number of units sold. The ending inventory, therefore, is assigned the costs of the most recently acquired batches. For example, suppose the beginning inventory and purchases were as follows:
Inventory, January 1 1,000 units x $5.00 $5,000
Purchases, March 19 800 units x $5.25 4,200
Purchases, September 12 1,20 units x $5.50 6,600
Total goods available 3,000 units $15,800
The company sold 1,900 units during the year and had 1,100 units remaining in inventory at the end of the year. The FIFO cost of goods sold is:
Oldest batch 1,000 units x $5.00 $5,000
Next oldest batch 800 units x $5.25 4,200
Next oldest batch 100 units x $5.50 550
Total cost of goods sold 1,900 units $9,750
The ending inventory consists of 1,100 units at a FIFO cost of $5.50 each (the price of the last 1,100 units purchased), or $6,050.
Under LIFO, the cost of goods sold is the sum of the most recent purchase, the next most recent, and so on, until the total number of units equals the number sold during the period. In the example, the LIFO cost of goods sold is:
Most recent purchase 1,200 units x$5.50 $6,600
Next most recent purchase 700 units x $5.25 3,675
Total cost of goods sold 1,900 units $ 10,275
The LIFO cost of the ending inventory is the cost of the oldest units in the cost of goods available. In this simple example, assuming the company adopted LIFO at the beginning of the year, the ending inventory cost is 1,000 units in the beginning inventory at $5 each ($5,000), plus 100 units from the first purchase during the year at $5.25 each ($525), a total of $5,525.
VIII. Check your grammar.
Translate the following sentences paying attention to translation of impersonal sentences.
IX. Check your grammar.
Put the questions to the sentences of exercise VII, beginning with the following words:
1. What …
2. Are …
3. Where …
4. Which …
5. Can …
Wordlist
|
anticipate |
передбачати, очікувати |
предвидеть, ожидать |
|
average |
середній |
средний |
|
claim |
стверджувати, заявляти |
утверждать, заявлять |
|
confuse |
змішувати, плутати |
смешивать, путать |
|
contend |
стверджувати, заявляти |
утверждать, заявлять |
|
conventional |
звичайний, нормальний |
обычный, нормальный |
|
holding gain |
прибуток від збільшення вартості активів |
доход от увеличения стоимости активов |
|
holding loss |
збиток від зменшення вартості активів |
убыток от уменьшения стоимости активов |
|
implication |
те, що мається на увазі |
смысл, значение |
|
increment |
приріст, прибуток |
прирост, увеличение |
|
inventory |
товарно-матеріальні цінності |
товарно-материальные ценности |
|
monetary measures |
грошовий вимірник |
денежный показатель |
|
net assets |
нетто-активи |
нетто-активы |
|
net monetary assets |
чисті грошові активи |
чистые денежные активы |
|
nominal currency |
номінальна валюта |
номинальная валюта |
|
replacement cost |
поновлена вартість |
обновленная стоимость |
|
replacement cost of assets |
витрати на заміну активів |
затраты на замену активов |
|
restate assets |
переводити активи із однієї валюти в іншу |
переводить активы из одной валюты в другую |
|
superhighway |
шосе |
шоссе |
|
wholesale value |
оптова ціна |
оптовая цена |
I. Read the text and determine the problems of measurement.
Accounting income does not include all of the company's holding gains or losses (increases or decreases in the market values of its assets). For example, construction of a superhighway may increase the value of a company's land, but neither the income statement nor the balance sheet will report this holding gain. Similarly, introduction of a successful new product increases the company's anticipated future cash flows, and this increase makes the company more valuable. Those additional future sales show up neither in the conventional income statement nor in the balance sheet.
Accounting reports have also been criticized on the grounds that they confuse monetary measures with the underlying realities when the prices of many goods and services have been changing rapidly. For example, if the wholesale price of an item has risen from $100 to $ 150 between the time the company bought it and the time it is sold, many accountants claim that $150 is the better measure of the amount of resources consumed by the sale. They also contend that the $50 increase in the item's wholesale value before it is sold is a special kind of holding gain that should not be classified as ordinary income.
When inventory purchase prices are rising, LIFO inventory costing keeps many gains from the holding of inventories out of net income. If purchases equal the quantity sold, the entire cost of goods sold will be measured at the higher current prices; the ending inventory will be measured at the lower prices shown for the beginning-of-year inventory. The difference between the LIFO inventory cost and the replacement cost at the end of the year is an unrealized (and unreported) holding gain.
The amount of inventory holding gain that is included in net income is usually called the "inventory profit." The implication is that this is a component of net income that is less "real" than other components because it results from the holding of inventories rather than from trading with customers.
When most of the changes in the prices of the company's resources are in the same direction, the purchasing power of money is said to change. Conventional accounting statements are stated in nominal currency units (dollars, francs, lire, etc.), not in units of constant purchasing power. Changes in purchasing power - that is, changes in the average level of prices of goods and services - have two effects. First, net monetary assets (essentially cash and receivables minus liabilities calling for fixed monetary payments) lose purchasing power as the general price level rises. These losses, do not appear in conventional accounting statements. Second, holding gains measured in nominal currency units may merely result from changes in the general price level. If so, they represent no increase in the company's purchasing power.
II. Re-read the text to find the answers to these questions.
III. What meaning have the following word combinations?
Accounting income, holding gain, holding loss, net monetary assets, net assets, monetary measures, replacement cost, replacement cost of assets, wholesale value, market value of assets, inventory, purchase price.
IV. Complete each sentence with a phrase from the box.
|
replacement cost, holding losses, monetary measures, cash flows, holding gains, |
V. Make the pairs of synonyms.
|
gains losses claim revenue purchase measure report |
contend increases decreases buy statement income estimate |
Make up your own sentences using these words.
VI. Read the text and describe the event called a gain.
Gains
Gains are defined as the increase in net worth1 from “peripheral2 or incidental” transactions. In other words, businesses have a gain if owners’ equity increases as the result of any earnings process not considered as revenue.
An event classified as a gain by one company might be considered revenue for another. For instance, although Fly-away would report the truck sale on its income statement as a gain, General Motors Company would report the sale of trucks as revenue because selling trucks is one of the primary means by which GM generates3 income.
Gains, like revenues, are recognized when they are earned and realized. However, gains are generally not thought of as “earned” in the same sense as revenues. For example, if Boeing purchased a piece of land in 1995 for $10, 000 and sold it five years later for $15, 000, it would recognize a $5, 000 gain in 2000, the year of the sale. Although this gain was “earned”, in the sense that Boeing made an intelligent investment that paid off, the company did not have to perform any activity, other than waiting for the land to increase in value. When accounting for gains, recognition is based primarily on when they are realized.
NOTES
1. net worth – a) стоимость имущества за вычетом обязательств,
б) собственный капитал предприятия
2. peripheral – частный, второстепенный
3. generate – производить
VII. Using the information from the texts
1. Explain what is meant by the terms “gain” and “revenue”.
2. Distinguish between gain and revenue.
3. When are gains and revenues recognized?
VIII. Discussion.
For each of the following situations, determine if the event described is a revenue, a gain, or neither. Explain your choice.
a) Suntaug Books sold an encyclopedia to Children’s Learning Center on account. Payment was not received at the moment.
b) The Milky Way dairy farm sold a delivery truck for an amount exceeding the value of the truck.
c) Richard Shapiro, an attorney, received $10 000 from a client for services to be performed next week.
IX. Check your grammar.
Put these words into the correct order to form the questions. Answer the resulting questions.
Grammar: Reported Speech |
Wordlist
|
cost accounting |
облік виробничих витрат |
учет производственных расходов |
|
cost finding |
визначення витрат |
определение расходов |
|
cost and profit analysis |
аналіз очікуваних витрат та прибутків |
анализ ожидаемых расходов и прибылей |
|
cost performance |
економічна ефективність |
экономическая эффективность |
|
division |
дивізіон, підрозділ, відділ |
дивизион, раздел, отдел |
|
explicit plan |
докладний/точний план |
подробный/точный план |
|
facilitate |
полегшувати, сприяти |
облегчать, способствовать |
|
flexible |
гнучкий |
гибкий |
|
managerial accounting |
управлінський облік |
управленческий учет |
|
performance |
виконування, робота, продуктивність, ефективність |
выполнение, работа, производительность, эффективность, |
|
preliminary |
попередній |
предварительный |
|
respond |
реагувати, відповідати |
реагировать, отвечать |
|
revise |
зміняти, виправляти |
изменять, исправлять |
|
solely |
тільки, виключно |
только, исключительно |
|
schedule |
план, графік, програма |
план, график, программа |
|
segment |
частина, відрізок |
часть, отрезок |
|
substantial deviations |
істотні відхилення |
существенные отклонения |
|
underlie |
лежати в основі |
лежать в основе |
|
visible |
видимий, очевидний |
видимый, очевидный |
I. Read the text and say what the budgets are prepared for.
The first major component of internal accounting systems for management's use is the company's system for establishing budgetary plans and setting performance standards. The setting of performance standards requires also a system for measuring actual results and reporting differences between actual performance and the plans.
Figure 1: Budget planning and performance reporting.
The simplified diagram in Figure 1 illustrates the interrelationships between these elements. The planning process leads to the establishment of explicit plans, which then are translated into action. The results of these actions are compared with the plans and reported in comparative form. Management can then respond to substantial deviations from plan, e.g. by taking corrective action.
Although plans can be either broad, strategic outlines of the company's future or schedules of the inputs and outputs associated with specific independent programs, most business plans are periodic plans – that is, they refer to company operations for a specified period of time. These periodic plans are summarized in a series of projected, financial statements, or budgets.
The two principal budget statements are the profit plan and the cash forecast. The profit plan is an estimated income statement for the budget period. It summarizes the planned level of selling effort, shown as selling expense, and the results of that effort, shown as "sales revenue and the accompanying cost of goods sold. Separate profit plans are ordinarily prepared for each major segment of the company's operations.
Figure 2: Relationship of company profit plan to responsibility structure.
The details underlying the profit plan are contained in departmental sales and cost budgets, each part identified with the executive or group responsible for carrying out that part. Figure 2 shows the essence of this relationship: the company's profit plan is really the integrated product of the plans of its two major product divisions. The arrows connecting the two divisional plans represent the coordinative communications that tie them together.
Many companies also prepare alternative budgets for operating volumes other than the volume anticipated for the period. A set of such alternative budgets is known as the flexible budget. The practice of flexible budgeting has been adopted widely by factory management to facilitate evaluation of cost performance at different volume levels and has also been extended to other elements of the profit plan.
The second major component of the annual budgetary plan, the cash forecast or cash budget summarizes the anticipated effects on cash of all the company's activities. It lists the expected cash payments, cash receipts, and amount of cash on hand, month by month throughout the year. In most companies, responsibility for cash management rests mainly in the head office rather than at the divisional level. For this reason, divisional cash forecasts tend to be less important than divisional profit plans.
II. Answer the questions.
III. What meaning have the following word combinations in the text?
Budgetary planning, cost finding, cost and profit analysis, performance reporting, substantial deviations, estimated income statement, explicit plans, mutual concern, flexible budget, cost performance, cash forecast.
IV. Match the following concepts with their definitions.
|
a) … is the process of expressing the company’s goals and objectives in quantitative terms b) … shows the expected cash receipts from activities for the coming period c) … is a plan for the future expressed in financial terms d) … is an estimated income statement for the budget period e) … is a set of alternative budgets for operating volumes f) … is revenues minus costs |
V. Put a word combination in the correct place to complete the following sentences.
|
the cash forecast, cash management, explicit plans, selling expense, the profit plan, the flexible budget, |
VI. Look back at the text and choose the correct words to go together.
money to/for payment of dividends
anticipated effects on /to cash
evaluation for/of cost performance
on /at different volume levels
identify with/to the executive
interrelationships between/of elements
respond on /to substantial deviations
VII. Read the text, give the title for it and answer the question “What are the functions of accounting personnel in the planning process?”
Planning is a management responsibility, not an accounting function. To plan is to decide, and only the manager has the authority to choose the direction the company is to take. Accounting personnel are nevertheless deeply involved in the planning process. First, they administer the budgetary planning system, establishing deadlines1 for the completion of each part of the process and seeing that these deadlines are met. Second, they analyze data and help management at various levels compare the estimated effects or different courses of action. Third, they are responsible for collating the tentative plans2 and proposals coming from the individual departments and divisions and then reviewing them for consistency and feasibility3 sand sometimes for desirability as well. Finally, they must assemble the final plans management has chosen and see that these plans are understood by the operating executives.
NOTES
1. deadlines – конечные сроки
2. collating the tentative plans – тщательное сравнивание пробных планов
3. feasibility - выполнимость
VIII Read and retell the text.
Explain the difference between participative1 and mandated budgeting2.
Budgets are used for planning, communication, coordination, allocation of resources, control and evaluation. Budgets affect people, and people affect budgets. Two processes to deal with these effects are participative budgeting and mandated budgeting. The purpose of participative budgeting is to involve employees in the budget process in anticipation of their acceptance of and willingness to work harder based on their involvement. The purpose of mandated budgeting is to communicate to employees the goals and objectives of upper-level management. Most companies use budgets that have characteristics of each of these processes. The number and types of budgets prepared by a company depends on whether it is a service, merchandising, or manufacturing firm.
The budgets are prepared during the revenue, conversion, and expenditure cycle planning processes and then are combined in the cash budget3 and pro forma financial reports, which are prepared to show the expected results of operations.
NOTES
1. participative budgeting – процесс составления бюджета при участии сотрудников компании
2. mandated budgeting - процесс составления бюджета руководством компании
3. cash budget – бюджет денежных средств
IX. Check your grammar.
Complete the sentences by reporting the speaker's words using a noun clause.
X. Using the information from the texts
Give the definition to the term ‘budget’.
Distinguish between:
Wordlist
|
accumulate |
накопичувати (ся), нараховувати |
накапливать(ся), начислять |
|
activity-based costing |
калькуляція собівартості за видом діяльності, при якій витрати збираються по усьому технологічному процесу |
калькуляция себестоимости по виду деятельности, при которой затраты собираются по всему технологическому процессу |
|
allocation (of costs) |
розподіл |
распределение |
|
cost |
ціна, вартість, собівартість |
цена, стоимость, себестоимость |
|
costs |
витрати |
расходы |
|
costing |
калькуляція собівартості |
калькуляция себестоимости |
|
cost driver |
причина змінення витрат |
причина изменения затрат |
|
drive |
бути причиною |
быть причиной, вызывать |
|
fixed costs |
постійні (незмінні) витрати |
постоянные затраты |
|
homogeneous |
однорідний, гомогенний |
однородный, гомогенный |
|
incur |
залучати |
вовлекать |
|
job order costing |
калькуляція витрат за виконанням замовлення |
калькуляция издержек по выполнению заказа |
|
mixed costs |
умовно-постійні витрати |
условно-постоянные затраты |
|
obtain |
здобувати, отримувати |
добывать, получать |
|
output |
вироблена продукція |
произведенная продукция |
|
overhead costs |
накладні витрати |
накладные расходы |
|
prime cost |
собівартість |
себестоимость |
|
process costing |
калькуляція витрат виробництва за процесами |
калькуляция издержек производства по процессам |
|
provisions |
резерви |
резервы |
|
tally |
визначати |
определять |
|
trace |
установлювати (ся) |
устанавливать(ся) |
|
uniform |
одноманітний |
однообразный |
|
variable costs |
змінні/перемінні витрати |
переменные затраты |
I. Read the text and determine the main methods of cost finding.
A major factor in business planning is the cost of producing the company's products. Cost finding is the process by which the company obtains estimates of the costs of producing a product, providing a service, performing a function, or operating a department. Some of these estimates are historical – how much did it cost? – while others are predictive – what will it cost?
The most fully developed methods of cost finding are used to estimate the costs that have been incurred in a factory to manufacture specific products. The simplest of these methods is known as process costing. In this method, the accountant first accumulates the costs of each separate production operation or process for a specified period of time. The total of these costs is then restated as an average by dividing it by the total output of the process during the same period.
Process costing can be used whenever the output of individual processes is reasonably uniform or homogeneous, as in cement manufacturing, flour milling, and other relatively continuous production processes.
A second method, job order costing, is used when individual production centres or departments work on a variety of products rather than just one during a typical time period. Two categories of factory cost are recognized under this method: prime costs and factory overhead costs. Prime costs are those that can be traced directly to a specific batch, or job lot, of products. These are the direct labour and direct materials costs of production. Overhead costs, on the other hand, are those that can be traced only to departmental operations or to the factory as a whole and not to individual job orders. The salary of a departmental supervisor is an example of an overhead cost.
A third method of cost finding, activity-based costing, is based on the fact that many costs are driven by factors other than product volume. The first task is to identify the activities that drive costs. The next step is to estimate the costs that are driven by each activity and state them as averages per unit of activity. Management can use these averages to guide its efforts to reduce costs. In addition, if management wants an estimate of the cost of a specific product, the accountant can estimate how many of the activity units are associated with that product and multiply those numbers by the average costs per activity unit.
Product cost finding under activity-based costing is almost always a process of estimating costs before production takes place.
II. Answer the following questions.
1. What is a major factor in business planning?
2. What is cost finding?
3. What are the methods of cost finding?
4. How is the total of the costs of each separate production operation restated in the method of process costing?
5. When is job order costing method used?
6. What are prime costs and overhead costs?
7. What is activity-based costing based on?
III. What meaning have the following word combinations?
Cost finding, process costing, job order costing, prime costs, overhead costs, job lot, activity-based costing, production volume, average costs, efficiency of operations, variable costs, fixed costs, mixed costs, cost drivers.
IV. Find the pairs of opposites.
|
reduce upper seldom expensive input difficult external costs |
output cheap easy revenues raise lower often internal |
Make up your own sentences using these words.
V. Math the concepts with their definitions.
6. Activity-based costing |
|
VI. Complete each sentence with a phrase from the box.
|
overhead costs, cost finding, prime costs, the company’s products, activity-based costing, fixed costs |
VII. The following statements have mistakes.
Correct them.
VIII. Read the text and answer the question:
What does the process of allocation mean?
Many production costs are incurred in departments that don't actually produce goods or provide salable services. Instead, they provide services or support to the departments that do produce products. Examples include maintenance departments, quality control departments, and internal power plants. Estimates of these costs are included in the estimated overhead costs of the production departments by a process known as allocation – that is, estimated service department costs are allocated among the production departments in proportion to the amount of service or support each receives. The departmental overhead rates then include provisions for these allocated costs.
IX. Translate the text in the written form.
Cost and profit analysis.
Accountants share with many other people the task of analyzing cost and profit data in order to provide guidance in managerial decision making. Even if the analytical work is done largely by others, they have an interest in analytical methods because the systems they design must collect data in forms suitable for analysis.
Managerial decisions are based on comparisons of the estimated future results of the alternative courses of action that the decision maker is choosing among. Recorded historical accounting data, in contrast, reflect conditions and experience of the past. Furthermore, they are absolute, not comparative, in that they show the effects of one course of action but not whether these were better or worse than those that would have resulted from some other course.
For decision making, therefore, historical accounting data must be examined, modified, and placed on a comparative basis. Even estimated data, such as budgets and standard costs, must be examined to see whether the estimates are still valid and relevant to managerial comparisons. To a large extent, this job of review and restatement is an accounting responsibility. Accordingly, a major part of the accountant's preparation for the profession is devoted to the study of methods and principles of analysis for managerial decision making.
X. Using the information from the texts
1. Name all the methods of cost finding you know.
2. Explain the difference between them.
Wordlist
|
audit |
перевірка, ревізія |
проверка, ревизия |
|
completion |
завершення, закінчення |
окончание, завершение |
|
entail |
викликати, спричиняти |
влечь за собой, вызывать |
|
fictitious |
фіктивний, вигаданий |
фиктивный, вымышленный |
|
fidelity |
точність, вірність |
точность, правильность |
|
lessor |
орендодавець |
арендодатель |
|
observe |
наглядати, стежити |
наблюдать, следить |
|
payroll |
платіжна відомість |
платежная ведомость |
|
reimbursement |
компенсація, відшкодування |
компенсация, возмещение |
|
sample |
зразок |
образец |
|
submit |
надавати |
предоставлять |
|
tax returns |
податкова декларація, розрахунок податку |
налоговая декларация, расчет налога |
|
theft |
крадіжка |
кража, воровство |
I. Guess the meaning of the international words.
Audit, report, budget, process, factor, operation, system, manager, outsider, document, instruction, check, creditor, duplication, rule, regulation, technique, standard.
II. Read the text and find out what accounting systems provide.
Accounting systems are designed mainly to provide information that managers and outsiders can use in decision making. They also serve other purposes: to produce operating documents, to protect the company's assets, to provide data for company tax returns, and, in some cases, to provide the basis for reimbursement of costs by clients or customers.
The accounting organization is responsible for preparing documents that contain instructions for a variety of tasks, such as payment of customer bills or preparing employee payrolls. It also must prepare documents that serve what might be called private information purposes, such as the employees' own records of their salaries and wages. Many of these documents also serve other accounting purposes, but they would have to be prepared even if no information reports were necessary. Measured by the number of people involved and the amount of time required, document preparation is one of accounting's biggest jobs.
Accounting systems must provide means of reducing the chance of losses of assets due to carelessness or dishonesty on the part of employees, suppliers, and customers. Asset protection devices are often very simple; for example, many restaurants use numbered meal checks so that waiters will not be able to submit one check to the customer and another, with a lower total, to the cashier. Other devices entail a partial duplication of effort or a division of tasks between two individuals to reduce the opportunity for unobserved thefts.
These are all part of the company's system of internal control. Another important element in the internal control system is internal auditing. The task of internal auditors is to see whether prescribed data handling and asset protection procedures are being followed. To accomplish this, they usually observe some of the work as it is being performed and examine a sample of past transactions for accuracy and fidelity to the system. They may insert a set of fictitious data into the system to see whether the resulting output meets a predetermined standard. This technique is particularly useful in testing the validity of the programs that are used to process data through electronic computers.
The accounting system must also provide data for use in the completion of the company's tax returns. This function is the concern of tax accounting. In some countries financial accounting must obey rules laid down for tax accounting by national tax laws and regulations.
III. Answer the following questions.
IV. What meaning have the following word combinations?
Operating documents, the company's assets, tax returns, reimbursement of costs, employee payrolls, asset protection devices, unobserved thefts, past transactions, fictitious data, predetermined standard.
V. Complete each sentence with a phrase from the box.
|
accounting systems, past transactions, tax returns, internal auditors, payrolls |
VI. Read the text and answer the question:
“What is the task of public auditing?”
Audit
Audit is examination of the records and reports of an enterprise by accounting specialists other than those responsible for their preparation. Public auditing by independent accountants has acquired professional status and become increasingly common with the rise of large business units and the separation of ownership from control. The public accountant performs tests to determine whether the management's statements were prepared in accord with acceptable accounting principles and fairly present the firm's financial position and operating results; such independent evaluations of management reports are of interest to actual and prospective shareholders, bankers, suppliers, lessors, and government agencies.
In English-speaking countries, public auditors are usually certified, and high standards are encouraged by professional societies. Most European and Commonwealth nations follow the example of the United Kingdom, where government-chartered organizations of accountants have developed their own admission standards.
VII. Read the text. Divide it into paragraphs. Give the title for each part. Retell the text.
Bookkeeping
Bookkeeping is the recording of the money values of the transactions of a business. Bookkeeping provides the information from which accounts are prepared but is a distinct process, preliminary to accounting.
Essentially bookkeeping provides two kinds of information: (1) the current value, or equity, of an enterprise and (2) the change in value-profit or loss-taking place in the enterprise over a given period of time. Management officials, investors, and creditors all require such information: management in order to interpret the results of operations, to control costs, to budget for the future, and to make financial policy decisions; investors in order to interpret the results of business operations and make decisions about buying, holding, and selling securities; and credit grantors in order to analyze the financial statements of an enterprise in deciding whether or not to grant a loan.
Although bookkeeping procedures can be extremely complex, basically there are two types of books used in the bookkeeping process – journals and ledgers. A journal contains the daily transactions (sales, purchases, and so on), and the ledger contains the record of individual accounts. The daily records from the journals are entered in the ledgers. Each month, as a general rule, an income statement and a balance sheet are prepared from the trial balance posted in the ledger. The purpose of the income statement or profit-and-loss statement is to present an analysis of the changes that have taken place in the ownership equity as a result of the operations of the period. The balance sheet shows the financial condition of a company at a particular date in terms of assets, liabilities, and the ownership equity.
VIII. Using the information from the text
IX. Building your vocabulary.
Fill in the blanks in these sentences with one of the synonyms given below. Put the words in the correct form.
|
require |
claim |
||||||||
|
solicit |
exact |
||||||||
|
ask |
summon |
||||||||
|
request |
demand |
||||||||
|
Minimum |
ASK |
Maximum |
|||||||
I. Learn the following instructions.
Аннотация статьи – это краткая характеристика оригинала, излагающая его содержание и иногда дающая критическую оценку.
Аннотация должна дать представление о характере статьи (научная статья, техническое описание и т.д.), о её структуре (какие вопросы и в какой последовательности разбираются, к каким выводам приходит автор и т.д.), о назначении статьи (на кого рассчитана), а также об объёме оригинала, обоснованности выводов и о других подобных моментах, характеризующих оригинал.
Рекомендации по составлению аннотации:
II. Read the text and make up the summary.
Accounting in any country reflects the level of its economic development to some extent As a dynamic system, accounting is being constantly improved in response to changes in the practice of managing economic activities and informational needs of users.
In times of command economy the main purpose of accoun ting was to control the safety of state property. Since the State was almost the sole owner, accounting was subordinated to the State as to the main user.
Transition to the market economy has created new targets and assigned other functions to accounting. This resulted in accounting reforms in Ukraine as a result of bringing the economy into compliance with market requirements.
A new phase of accounting development in Ukraine began on January 1,2000, when the Law 'On Accounting and Financial Reporting in Ukraine' and the Accounting Standards (Provisions) of Ukraine (ASU) came into force. The Verkhovna Rada of Ukraine adopted the Law on July 16. This day is now celebrated as a professional holiday, the Accountant's Day.
The Law of Ukraine "On Accounting and Financial Reporting in Ukraine", dated July 16, 1999, No. 996-XIV (hereafter — the Law on Accounting) determines legal foundations for regulating, organizing and performing the accounting and preparing financial statements in Ukraine. It applies to all legal entities founded in compliance with the legislation of Ukraine, irrespective of their organizational and legal forms, as well as forms of ownership. It also relates to representative offices of foreign economic entities, which are liable to perform the accounting and present financial statements in accordance with the legislation.
In compliance with the Law, the purpose of accounting and financial reporting is to provide full, true and unbiased information on financial situations, activity results and cash flow of an enterprise.
Accounting and financial reporting in Ukraine are founded on the following basic principles: prudence, completeness, autonomy; consistency; going concern, charging and conformity of income and expenses, substance over form, historical (actual) cost, monetary unit principle, periodicity.
Accounting is performed by an enterprise in the currency of Ukraine. Financial, tax, statistical and other types of reporting prepared in monetary terms are grounded on accounting data.
The methodology of accounting and financial reporting is regulated by the Ministry of Finance of Ukraine, which approves the Accounting Standards of Ukraine (hereafter -ASU), the Chart of Accounts, the Instruction on its application, and other normative legal acts related to performing the accounting and compiling the financial reports.
The Accounting Standards of Ukraine are normative legal acts, which determine the principles and methods of performing the accounting and preparing the financial reports. ASU is consistent with the International Accounting Standards (IAS). The Methodological Council, which was founded and attached to the Ministry of Finance of Ukraine as a consultative body, carries out expertise and finishes off the ASU.
The important instrument of accounting regulation in Ukraine is the Chart of Accounts; an arranged list of accounts necessary to reflect activities of enterprises and organizations.
The Chart of Accounts introduced in 2000 is formed in accordance with the elements of financial reports and includes ten classes of accounts (fig. 1).
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Classes of accounts |
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|
1, 2, 3 |
4 |
5, 6 |
7 |
8, 9 |
0 |
|
Assets |
Owner’s equity |
Liabilities |
Income |
Expenses |
Off-balance sheet accounts |
|
Balance Sheet Elements |
Elements of Income Statement |
Notes to the financial statements |
Figure 1. The general scheme of interrelation of the Chart of Accounts and basic forms of financial reporting
The first six classes provide information necessary for preparing a balance sheet. Their purpose is to represent availability, state and changes in assets, owner's equity and liabilities. The interrelation of a balance sheet and these accounts is given in fig. 2
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Sections of assets |
Accounts |
Sections of claims |
Accounts |
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class |
name |
code |
class |
name |
code |
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I. Non-current assets |
1 |
Non-current assets |
10-19 |
I. Owner’s equity |
4 |
Owner’s equity and liability provision |
40-46 |
|
II. Current assets |
2 |
Inventories |
20-29 |
II. Warranty provision |
47-49 |
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|
3 |
Cash, cash equivalents and other assets |
30-38, Dt. 64, 65, 68 |
III. Long-term liabilities |
5 |
Long-term liabilities |
50-59 |
|
|
IV. Current liabilities |
6 |
Current liabilities |
60-68, Cr. 37 |
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III. Deferred expenses |
39 |
V. Deferred income |
69 |
Figure 2. Interrelation of the Balance Sheet and Chart of Accounts
Classes of accounts 7, 8, 9 are transit and intended for accounting income, expenses and activity results of an enterprise, and for preparing an income statement (fig. 3).
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|
Accounts |
Income |
Accounts |
||||
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Class |
name |
code |
class |
name |
Code |
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8 |
Articled of expenses |
80-89 |
7 |
Income and activity results |
70-78 79 |
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9 |
Activity expenses |
90-99 |
Figure 3. Interrelation of the income statement and the Chart of Accounts
The Ministry of Finance of Ukraine approved the Instruction on Applying the Chart of Accounts, to reflect similar economic operations in the corresponding accounts and sub-accounts in a united way. The instruction specifies the application and procedure for maintaining accounts, and contains the typical account correspondence as well.
Since banks and budgetary institutions carry out specific activities, not all ASU apply to them. Specially worked out Charts of Accounts are used under these circumstances. Therefore, the state accounting policy is carried out by:
The National Bank of Ukraine — concerning the procedure for keeping records and preparing financial reports at banks;
The State Treasury of Ukraine — related to the procedure for keeping the records and preparing the financial reports on budget performance, and self-supporting operations for
budgetary institutions;
According to industrial peculiarities, ministries and other central executive bodies work out, within their own authority, methodological recommendations pertaining to the application
of the Accounting Standards of Ukraine.
Business entities are legal entities, which under the current legislation are deemed to be small business entities, legal entities that do not carry out business activities, except for budget institutions, regardless of the forms of ownership, forms of business and kinds of activities. Business entities are also representative offices of non-residents. All of them should prepare the abridged financial reports according to ASU 25 'Financial Reporting of a Small Business Entity' and may apply the Chart of Accounts.
Therefore, in Ukraine five Charts of Accounts are used (see table 1):
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No. |
Description |
Adopted by whom and when |
Date of coming into effect |
|
1 |
Chart of Accounts of assets, capital, liabilities and economic operations of enterprises and organizations |
Order of the Ministry of Finance of Ukraine dated November 30, 1999 No. 291 |
In 2000 since the date specified by the regulating document of an enterprise’s (organization’s) director |
|
2 |
Chart of Accounts in the National Bank of Ukraine |
Resolution of the National bank of Ukraine dated November 21, 1997 No. 388 |
January 1, 1998 |
|
3 |
Chart of Accounts of commercial banks of Ukraine |
Resolution of the National bank of Ukraine dated November 21, 1997 No. 388 |
January 1, 1998 |
|
4 |
Chart of Accounts of budgetary institutions |
Order of the Chief Department of the State Treasury of Ukraine dated December 10, 1999 No. 114 |
January 1, 2000 |
|
5 |
Chart of Accounts of assets, capital, liabilities and economic operations of small business entities |
Order of the Ministry of Finance of Ukraine |
April 19, 2001 |
All enterprises are to prepare the financial reports on the grounds of accounting data. An enterprise's director and accountant must sign this report.
While preparing and presenting the financial report an enterprise has to follow requirements of the Law "On Accoun ting," as well as the Procedure for presenting the financial report, approved by the Resolution of the Cabinet of Ministers of Ukraine dated February 28, 2000 No. 419.
The financial report is to be authentic. Therefore, before preparing the financial report it is mandatory to make an inventory of an enterprise's assets and liabilities and to document their availability, state and assessment.
The annual financial statements of enterprises (except for budgetary institutions, small business entities and represen tative offices of non-residents) comprise the following:
- Balance sheet;
- Income statement;
- Cash flow statement;
- Owner's equity statement;
- Notes to the annual financial statements.
Contents of the reporting forms, general requirements for specifying and revealing their elements as well as certain articles are to be specified by ASU 1—6. Methodological foundations of forming accounting and disclosing the information on certain articles in the financial report are specified by the corresponding Accounting Standards.
A calendar year is the reporting period for preparing the financial reports.
The interim financial reports are to be prepared quarterly as a part of the Balance sheet and Income Statement with the running total beginning in the reporting year.
Enterprises, which have subsidiaries, in addition to financial reports on their own economic operations, are to prepare and present the consolidated financial statement to owners (founders). It should be done within the time limits, but not later than 45 days after the reporting quarter completion and not later than April 15, which follows the reporting year. The procedure for preparing the consolidated financial reports and general requirements for disclosing information on preparing the consolidated financial reports are specified by ASU 20 "The Consolidated Financial Report."
Associations, in addition to their own report, are to prepare and present the general financial report of all enterprises, amalgamated with the above-mentioned if this is provided for by the articles of association of enterprises in accordance with the legislation. The procedure for disclosing information on associations and reflecting in accounting and reporting the purchase of other enterprises and goodwill that arises while purchasing and amalgamating enterprises is specified by ASU 19 "Associations". This Provision is not to be applied to operations on amalgamating enterprises, which are under joint control, and also to accounting for stakes of joint enterprises.
The enterprises' financial statement does not represent any commercial secret (except cases provided for by the legislation) and is to be presented to:
The date of presenting the financial reports for enterprises is deemed the date of their actual submission to the assigned place, in case of sending it by mail, the date of receiving the report by an addressee, which is indicated on the stamp of a post-office that services the addressee. If the date of presenting the report falls on a non-working day, the term of presentation should be transferred to the first working day following the day-off.
Open joint-stock companies, enterprises — issuers of bonds, banks, trust companies, currency and stock exchanges, investment funds, investment companies, credit unions, non-state pension funds, insurance companies and other financial institutions should promulgate the annual financial report and consolidated report in periodical publications, or publish it in the form of separately printed issues, no later than June 1 following the reporting period.
An owner or an authorized body managing an enterprise in compliance with the current legislation and documents of association, is responsible for:
The Law on Accounting regulates the accounting and financial reporting in direction of harmonization with the International Standards. At the same time, business entity is given the right to choose:
The reform of accounting and financial reporting in Ukraine is an integral part of events aimed at introducing the market-oriented economic relations. This reform should be carried out within realization of a strategic course towards the integration with the world economic area and adapting the legislation of Ukraine according to the global economy requirements.
NOTES
financial reporting – финансовая отчётность
in response to changes in – в ответ на изменения
managing economic activities – ведение хозяйственной деятельности
command economy – планово-административная экономика
subordinated – подчинён
transition – переход
new target – новая цель
this resulted in – это привело к
accounting reform – реформа бухучета
bringing into compliance with – приведение в соответствие с
came into force – вступить в силу
legal foundation – правовая основа
regulating – регулирование
performing – ведение
preparing – составление
in compliance with – в соответствии с
irrespective of – независимо от
foreign economic entity – иностранный субъект предпринимательской деятельности
which are liable – которые обязуются
prudence – осмотрительность
completeness – полное освещение
consistency – последовательность
going concern – непрерывность
charging – начисление
conformity – соответствие
substance over form – превалирование сущности над формой
financial, tax, statistical reporting – финансовая, налоговая и статистическая отчётность
prepared in monetary terms – которые используют денежный измеритель
methodology – методология
Accounting Standards of Ukraine – положения бухучета
Chart of Accounts – план счетов
instructions on its application – инструкция о его применении
consistent with – не противоречат
Methodological Council – методологический совет
accounting regulation – регламентация бухучета
arranged list – систематизированный список
off-balance sheet account – забалансовый счет
notes to the financial statements – примечания к финансовым отчетам
interrelation – взаимосвязь
availability – доступность, присутствие
state – состояние
liability provision – обеспечение обязательств
warranty provision – обеспечение будущих затрат и платежей
cash equivalents – расчеты
deferred expenses – затраты будущих периодов
intended for accounting – предназначены для учета
articles of expenses – затраты по элементам
cost accounting – учет затрат
legal entity – юридическое лицо
except for – кроме
budgetary institution – бюджетное учереждение
aforesaid – вышеупомянутый
detached sub-unit – обособленное подразделение
transferred to – переведенные на
State Treasury of Ukraine – Госказначейство Украины
self-supporting operation – госхозрасчётная операция
pertaining to – относительно
date o coming into effect – дата вступления в действие
order – приказ
assessment – оценка
specifying – уточнение
revealing – раскрытие
certain article – определенная статья
disclosing – раскрытие
reporting period – отчетный период
interim – промежуточный
quarterly – ежеквартально
running total – нарастающий итог
amalgamated – объединенный
article of association – учредительный документ
management competence – сфера управления
Body of State statistics – орган госстатистики
Raiyon State Administration – Райгосадминистрация
City Executive Committee – Горисполком
is to be submitted – необходимо подавать
аctual submission – фактическая подача
in case of sending – в случае отсылки
Read the text and make up the summary.
In accounting as well as in all other spheres of activity, Great Britain's long-standing traditions and frugal attitude are unique. At the same time the British are still open to new trends and achievements in economic science and are ready to integrate them into their national accounting system.
When analyzing the British financial accounting model, one is to take into account that it traces its roots back to the Middle Ages. Its professional foundations have been forming for centuries. The United Kingdom's accounting school, later called the Anglo-Saxon accounting school, became the foundation of its accounting system. According to most specialists this model represents the prevailing paradigm of modern accounting standardization. The Anglo-Saxon system formed the basis for the International Accounting Standards (IAS).
Therefore, the headquarters of the International Accounting Standards Board (which has recently been called the Accounting Standards Committee) is located in the capital of Great Britain.
Because the IAS system is acknowledged by the European Community as the basis for further integration in accounting systems of member states; and because all companies whose shares have been sold on the European stock exchanges will have to represent financial reporting in IAS format beginning in 2005, one may conclude that the British accounting model will continue to prevail. This also affects Ukraine directly because of the Law on accounting and reporting, in which local accounting refers to international standards.
It is important to note that the British often call their accounting rules "the generally accepted accounting principles" (GAAP). Since the USA uses the same abbreviation to designate its accounting system, misunderstandings often occur while interpreting nuances in the processing of accountants' data within the national systems of financial reports. That's why the following abbreviations have recently been used more frequently: for Great Britain — UK GAAP; and for the United States - US GAAP.
In practice, however, the standards created by public accounting organizations are a peculiar feature of the official management of British accounting. This situation generally reflects the British regulatory style in which both the state and society trust the professional community, who in turn strives to qualify this trust by providing maximum efficiency, clarity and democracy in their professional activities.
The legislative regulation of accounting issues on a national scale began only in 1981 when Great Britain started to implement the provisions of the Fourth Directive of the EU. (This document contains basic rules of financial accounting, which must be followed by enterprises of European Union member states). The 1985 Act on Companies continued this implementation by uniting the Acts of 1947, 1948, 1967 and 1981. The 1989 Act on Companies reflected requirements of the Seventh Directive of the EU, which deals with the consolidated financial reporting, and the Eighth Directive of the EU, which refers to auditors' activities.
However, the regulation on the level of professional organizations began much earlier. In 1970 the Institute of Charted Accountants in England and Wales (ICAEW) formed the Accounting Standards Steering Committee (ASSC) whose tasks among others were to generalize accounting practices and improve accounting rules and methods.
The Accounting Standards Board has been fulfilling the functions of the committee since August 1991. The committee managed to pass twenty-two SSAP standards, which were then approved for application by a newly created body. All of these standards are obligatory for members of the six above-mentioned organizations. The 1985 and 1989 Acts on Companies alluded to the compulsory application of these standards.
The Financial Reporting Standards (FRS) are used in England along with the SSAP Regulations.
The following standards of accounting and reporting are now valid in the United Kingdom:
SSAP 2 Disclosure of Accounting Policies,
SSAP 4 Accounting for Government Grants,
SSAP 5 Accounting for Value Added Tax,
SSAP 9 Inventories and Long-Term Contracts,
SSAP 13 Accounting for Research and Development,
SSAP 15 Accounting for Deferred Tax,
SSAP 17 Accounting for Post-balance Sheet Events,
SSAP 19 Accounting for Investment Properties,
SSAP 20 Foreign Exchange Translation,
SSAP21 Accounting for Leases and Hire Purchase Contracts.
A separate statute, the Financial Reporting Standard for Smaller Enterprises (FRSSE), exists for small business entities in the British accounting system.
All of the above-mentioned documents form an integral part of the accounting standards. But Great Britain has recommended standards in addition to those. Most important are the Statements of Recommended Practice (SORP). These documents do not relate to the majority of enterprises and are either concerned with particular problems in a specific industry or in other business situations.
Stock exchange rules are an additional source of accounting regulation. But these rules are applied only to those companies whose shares undergo an exchange listing.
After Ukraine had started a radical accounting reform in accordance with international standards, principal differences between Ukrainian and British financial accounting systems were eliminated. Today's concept of Ukrainian accounting conforms completely to generally accepted accounting principles.
As to the IAS system, Ukraine and Great Britain's national accounting systems preserve some peculiarities.
At the same time some differentiation within the limits of the general IAS concept is considered possible. As is known, IAS allows for the application of so-called alternative accounting methods. But national systems of financial accounting and reporting effect such possibilities in different ways.
Let's give a few examples of discrepancies between the accounting of Ukraine and the United Kingdom.
In accordance with paragraph 23 of IAS 2 "Inventories”, such an accounting method of inventories flow as LIFO ("last in -first out") is optional. The LIFO method is acknowledged as a standard way of accounting along with other generally accepted ways of inventories retirement evaluation in Accounting Standards of Ukraine (ASU). At the same time British standard SSAP 9 directly prohibits the usage of this method in the accounting practices of Great Britain. Despite this fact British companies doing business outside Great Britain through subsidiary enterprises may use the LIFO mechanism if it is permitted by local accounting regulations.
Thus, if an enterprise of British origin functions in Ukraine, it may freely use a method of inventories write-off evaluation in accordance with the "last in - first out" principle.
An interpretation of financial expenses incurred because of an acquisition of fixed assets is another example of different applications of IAS alternatives.
IAS 23 "Borrowing Costs" in paragraph 11 as an alternative approach allows for the amortization of borrowing costs incurred due to the entering of qualified assets into the books.
Ukraine has not accepted this alternative. Cl.11 of UAS 8 "Intangible Assets" and cl.8 of ASU 7 "Fixed Assets" prohibit the inclusion of interest credit expenses into/an intangible assets cost.
At the same time English standards permit in some situations to include such costs into the cost of fixed assets. But this method is deemed more an exception rather than a rule and is not encouraged as a primary approach. Thus, paragraph 19 of the standard says that an enterprise may make a decision to capitalize borrowing costs directly related to the building up of intangible assets as a part of the value of such assets. In connection with this, the total amount of the borrowing costs capitalized within a reporting period is not to exceed the total amount of borrowing costs incurred within this period.
There are also many discrepancies of a less conceptual character.
For example, when evaluating fixed assets such as constructions erected by the enterprise itself (without hiring a general contractor) the British system highlights overspent costs. They are explained in the following way. If extraordinary expenses were incurred during construction, an enterprise is to find a guilty person. If the overspending occurred because of internal inefficiency, it is not to be included into the value of the building and is to be written off in the period of its occurrence. Excessive spending on building materials, which do not correspond to the nomenclature of the construction, by the internal supply dispatcher is an example of such situation. If overspending was caused by external factors (e.g. legislative increase in workers' salary underestimated expenses are to be capitalized by the genera standards. An interpretation of selling expenses in accounting illustrates another discrepancy. In accordance with cl. 11 SAS 16 selling expenses are not to be included into the production cost under cl. 17 of the same standard they are also not to be included into the cost of goods sold.
In practice, British accounting follows the same rule. But this general principle loses validity in the case of goods sold under the conditions "sale or return." Thus, goods at a buyer's warehouse remain a seller's property. In such situations, a seller's expenses for package and delivery of goods to a buyer are to be included into the cost of goods.
The British are also eccentric in some nuances of charging amortization.
A renewals accounting, whose annual costs necessary to maintain the said infrastructure are acknowledged as an amortization security, is applied to such assets. As long as these expenses occur, they are to be amortized. As a result, both the cost of water network items and the amounts of their amortization increase.
A forced transformation of Ukrainian accounting to the general European format expanded professional interests of Ukrainian accounting personnel. This article was written to facilitate a familiarization with the British accounting experience.
regulatory scheme – регуляторная схема
long-standing traditions – давние традиции
frugal attitude – бережливое отношение
one is to take into account – следует принять во внимание
traces its roots back – уходит корнями в
prevailing paradigm – превалирующая парадигма
modern accounting standardization – современная бухгалтерская стандартизация
International Accounting Standards (IAS) – международные стандарты бухучета (МСБ)
International Accounting Standards Board – совет по международным стандартам бухучета
the Accounting Standards Committee – комитет по международным стандартам
acknowledged – признана
European stock exchange – Европейскaя биржа
will continue to prevail – будет превалировать
Affects – касается
the Low on Accounting and Reporting – Закон о бухучёте и отчётности
refers to – соответствует
Generally accepted accounting principles (GAAP) – общепринятые принципы бухучёта
while interpreting nuances – при интерпретировании нюансов
processing of accountants’ data – бухгалтерская обработка данных
within the national systems – в рамках национальных систем
peculiar feature – особенность
official management – официальное регулирование
regulatory style – регулирование
trust – доверяют
in turn – в свою очередь
strives to qualify – старается оправдать
clarity – ясность
accounting issue – учётный вопрос
to implement the provisions – внедрять положения
EU = European Union – Европейский Союз
implementation – внедрение
the Institute of Chartered Accountants – институт дипломированных бухгалтеров
Accounting Standards Steering Committee – Комитет по управлению бухгалтерскими стандартами
to generalize accounting practice – обобщить опыт бухгалтерской практики
the Accounting Standards Committee – комитет по бухгалтерским стандартам
draft standards were passed – были приняты проекты стандартов
the Statement on Standard Accounting Practice (SSAP) – положение по стандартной бухгалтерской практике
alluded to – ссылались на
government grants – правительственные дотации
value-added tax – налог на добавленную стоимость
hire purchase contract – контракт на арендное приобретение
Financial Reporting Standard for Smaller Enterprises – стандарт финансовой отчетности малых предприятий
the Statements of Recommended Practice – положение по рекомендуемой практике
undergo exchange listing – проходят биржевой листинг
radical accounting reform – радикальная реформа бухучёта
conforms completely – полностью согласован с
preserve some peculiarities –сохраняют некоторые особенности
discrepancy – расхождение
acknowledged – признан
inventories retirement evaluation – оценка выбытия запасов
despite – не смотря на
inventories write-off evaluation – оценка списания запасов
interpretation of expenses incurred – интерпретация понесённых расходов
of a less conceptual character – менее концептуального характера
without hiring a general contractor – не привлекая генподрядчика
highlights – выделяет
overspent costs – перерасходные издержки
occurrence – наступление события
excessive spending – перерасходные издержки ( на закупку )
loses validity – не действует
goods at buyer’s warehouse – товары, находящиеся на складе у покупателя
water network item – объект водной сети
forced transformation – форсированный перевод
to facilitate – для того, чтобы облегчить
familiarization - ознакомление
Key Terms Glossary
Account |
A record of the accumulated results of accounting events affecting particular asset, liability, or owners’ equity items |
|
accounts payable |
A liability representing the company’s obligation to external suppliers of goods or services |
|
accounts receivable |
An asset representing the company’s right to receive money from customers |
|
accounting |
The recording, classifying, summarizing, and interpreting of financial events and transactions to provide management and other interested parties the information they need to make better decisions |
|
accounting cycle |
Formal process by which companies record accounting information, transfer it to specific accounts, and assemble it for the preparation of financial statements |
|
accounting equation |
Assets = Liabilities + Owners’ equity |
|
accounting event |
An economic event that is specific to the entity, is measurable, and changes the entity’s rights and/or obligations |
|
accounting system |
A system used to identify, analyze, measure, record, summarize, and communicate relevant economic information to interested parties |
|
actual manufacturing overhead |
The amount of overhead incurred during the period, recorded as debits to Manufacturing Overhead for each cost pool when the cost is incurred |
|
annual report |
The report provided to stockholders and other external users that contains general information about the company as well as the financial as statements for the fiscal period |
|
asset |
A right to use resources that are expected to have future economic benefits for the entity |
|
balance sheet (statement of financial position) |
The financial statement designed to show the assets, liabilities, and owners’ equity of the entity at the end of the period covered by the income statement |
|
benefit |
Something that provides business resources or reduces consumption |
|
bond |
A certificate that represents the debt of a company |
|
budget |
A plan for the future expressed in financial terms |
|
budgeting |
The process of expressing the company’s goals and objectives in quantitative terms |
|
capital |
An owners’ equity account in a sole proprietorship or partnership |
|
cash budget |
A budget that shows the expected cash receipts and disbursements from activities for the coming period |
|
chart of accounts |
A list of all a company’s general ledger accounts by name and number |
|
conversion cycle |
The sequence of manufacturing events that combines raw materials with labor and other manufacturing resources to produce products |
|
cost |
Something that requires the use of business resources |
|
cost of goods sold |
An expense that represents the company’s cost of the products sold to customers |
|
cost driver |
The means of measuring activity that reflects consumption of resources; that which causes costs to change |
|
credit (Cr) |
Any dollar amount entered on the right-hand side of an account |
|
current asset |
An asset expected to be converted to cash or consumed within a year |
|
current liability |
A liability expected to be discharged within a year |
|
current ratio |
The ratio of total current assets to total current liabilities, which measures the ability of the company to meet its current obligations |
|
debit (Dr) |
Any dollar amount entered on the left-hand side of an account |
|
direct labor cost |
The cost of the employees whose jobs directly relate to the manufacture of products |
|
economic event |
A situation that occurs which, when acted on, affects an entity’s wealth |
|
equity |
Obligations of the business to transfer resources of the company to other parties at some time in the future |
|
expenditure |
Cash payment made to acquire goods and services, reduce liabilities, or reward owners for their interest in the firm |
|
expense |
The amount incurred in an attempt to generate revenue |
|
expense event |
Either a decrease in assets or an increase in liabilities and a decrease in owner’s equity resulting from the operations of the business |
|
FIFO |
First-in, first-out: a cost flow assumption that presumes inventory purchases (costs) are charged to cost of goods sold in chronological order |
|
financial accounts information |
The information provided by the financial accounting subsystem |
|
financial statements |
A collective term used to describe the information communicated to external users by the financial accounting subsystem |
|
finished goods inventory |
An asset that represents a company’s right to use finished products |
|
fixed cost |
A cost that is constant in total as the amount of cost driver changes but changes per unit as the cost driver changes throughout the relevant range |
|
flexible budget |
A budget prepared to reflect the actual production level of the period |
|
general journal |
A chronological record of the accounting events which shows both the debit and credit side of each accounting event |
|
general ledger |
The record of all a company’s accounts |
|
horizonal analysis |
Comparison of each item on a financial statement with that same item on statements from previous periods |
|
historical cost |
The cash or cash equivalent value that either changed hands, or became obligated when an accounting event occurred |
|
income statement |
The financial statement designed to show the revenues, expenses, and the resulting net income for a period of time |
|
indirect labor cost |
The cost of production employees who do not actually produce the products but provide other needed services |
|
internal auditor |
A private accountant responsible for assessing the company’s internal control system |
|
inventory |
An asset that the company intends to sell to customers |
|
job order costing system |
A product costing system that accumulates production costs based on individual jobs or batches |
|
LIFO |
Last-in, first-out: a cost flow assumption that presumes inventory purchases (costs) are charged to cost of goods sold in reverse chronological order |
|
limited liability |
The condition which indicates that investors are not personally liable for the debts of the business |
|
limited partnership |
A partnership composed of one or more general partners and one or more limited partners |
|
liquidity |
The time required to convert an asset into cash or use it in operations |
|
long-term asset |
An asset expected to be used for more than a year |
|
long-term liability |
A liability expected to be discharged after a year |
|
loss |
A decrease in assets or increase in liabilities and a decrease in owners’ equity resulting from events that are incidental to the ongoing operations of the firm, with the exception of distributions to owners |
|
mandated budgeting |
A budgeting system that relies on predetermined standards set by upper levels of management that are passed down to lower levels of an organization |
|
marketing function |
The function responsible for determining the wants and needs of consumers and devising a system for distributing the goods and services they demand |
|
merchandise inventory |
The goods a company acquires with the intent of selling |
|
mixed cost |
A cost that varies in the same direction as a cost driver but not indirect proportion, and has both a fixed and a variable component (also known as a semivariable cost) |
|
net income (accounting income) |
The difference between revenue and expense in a certain time period |
|
net price method |
A method of recording the acquisition of inventory that assumes the cost of merchandise inventory is the purchase price less any available cash discount |
|
nominal account |
A temporary account relating to a given period of time |
|
owner’s equity |
The obligation of a business to transfer residual resources to owners in the event that the business ceases operations |
|
participative budgeting |
A budgeting system that allows individuals who are affected by the budget to have input into the budgeting process |
|
product cost |
A cost incurred in connection with the production of products for resale in a manufacturing company |
|
product mix |
In a multiple-product company, the total of all products sold |
|
ratio analysis |
The relationship between two or more accounts on the same statement or accounts from two different statements related by the transactions they represent |
|
raw materials inventory |
An asset representing the company’s right to use raw materials |
|
replacement cost |
The cost of producing or otherwise acquiring a similar item |
|
revenue |
The amount earned by a company for providing goods and services to customers |
|
sales budget |
a budget that shows the expected sales for the period in both physicals (quantity) and financial (dollar) terms |
|
statement of cash flows |
The financial statement designed to show a business’s cash inflows and outflows as well as the net change in the cash balance for the same time period as the income statement |
|
statements of owners’ equity |
The financial statement designed to show the changes that occurred in owners’ equity for the period of time covered by the income statement |
|
trial balance |
An internal document showing a company’s account or balances to verify the equality of debits and credits |
|
variable cost |
A cost that varies in total in proportion to the change in cost driver level but remains constant per unit of cost driver throughout the relevant range |
|
vertical analysis |
Analysis of the relative size of items to a base item within one |
1. Ainsworth P., Deines D., David Plumlee R. Introduction to Accounting: An Integrated Approach. – Chicago, 1997.
2. Dodge R. Foundations of Business Accounting. – Thomson Business Press, 1997.
3. Dyson J. R. Accounting for Non-Accounting Students. – Pitman Publishing, 1998.
4. John J. Wild. Financial Accounting: Information for Decisions, 2/e - University of Wisconsin, Madison, 2002.
5. Данилова З.В., Князевська І. В. Business English. Fundamentals of Accounting and Finance. Навчальний посібник англійською мовою. Астон, 1999.
6. Accounting Integrated Performance Activities <http://www.bused.org/af.html>
7. Encyclopedia Britannica <http://www.britannica.com>
8. Great Ideas for Teaching Accounting http://swcollege.com/vircomm/gita/gita_main.html
9. Learning Matters Online http://www.learningmattersonline.uk.co
10. Principles of Financial Accounting http://cbpp.uaa.alaska.edu/afrfb/acct201/acct201.htm
11. The Big Five – Accounting Web Quest http://projects.edtech.sandi.net/miramesa/five/
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