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Bookkeeping as Part of Accounting Cycle
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Active vocabulary
| Bookkeeping | Бухгалтерия; бухгалтерский учет |
| Double-entry bookkeeping | Система бухгалтерского учета с двойной записью |
| Bookkeeper | Бухгалтер, счетовод |
| Accurate | Точный, правильный; тщательный |
| Accurately | Точно, правильно; тщательно; безошибочно |
| Receipts | Денежные поступления, выручка; приход; доходы |
| Data | Данные |
| Datum | Данная величина |
| Record | Запись; регистрация; учетные документы; документация; записывать; регистрировать |
| Record-keeping | Ведение учета; учет |
| Preliminary | Предварительный |
| Financial statements | Финансовая документация |
| Monthly statement | Ежемесячный бюллетень |
| Journal | Бухгалтерский журнал, регистр; ведомость |
| General journal | Главный журнал учета |
| Ledger | Бухгалтерская книга, бухгалтерский регистр, гроссбух |
| General ledger | Общая бухгалтерская книга |
| Balance the ledgers | Сбалансировать бухгалтерские книги |
| Posting | Разноска по счетам, перенос в бухгалтерскую книгу: проводка |
| Post | Делать проводку; разносить счета; заносить в бухгалтерскую книгу |
| Ledger posting | Запись в главную бухгалтерскую книгу |
| To post the journal into the ledger | Переносить журнальные записи в главную книгу |
| Draw up a balance | Подводить, составлять баланс |
| Trial balance | Пробный, предварительный бухгалтерский баланс |
| To bring accounts to a balance | Составлять сводный баланс |
| Favourable balance | Активный баланс; положительный баланс |
| Unfavourable balance | Пассивный баланс; отрицательный баланс |
| Cash balance | Кассовая наличность |
| Balance of an account | Остаток счета |
| Balances with foreign banks | Остатки на счетах в заграничных банках |
| Balance in hand | Денежная наличность; наличность кассы |
| Balance of payments | Платежный баланс |
| Balance of payment deficit | Дефицит платежного баланса |
| Debit account | Запись в левой части счета, показывающая задолженность организации |
| Debit of an account | Дебет счета; списание средств со счета |
| Debit balance | Дебетовое сальдо; дебетовый баланс, положительное сальдо |
| Credit account | Запись в левой части счета, показывающая приход актива |
| Credit balance | Кредитовое сальдо; кредитовый баланс, отрицательное сальдо |
| List | Список; составлять список |
| Accuracy | Точность, правильность; тщательность |
| Error | Ошибка, погрешность |
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For management of any company to be efficient, extensive and accurate information concerning receipts and payments, assets and liabilities, depreciation of assets and other data about company status are required. Such information being obtained mainly from different records, additional funds and time should be invested in bookkeeping and accounting system.
In general, accounting and bookkeeping mean identifying, measuring, recording economic information about any business, bookkeeping being considered the preliminary stage and part of the larger field of accounting.
The task of a bookkeeper is to ensure the record-keeping of accounting and therefore to provide the data to which accounting principles are applied in the preparation of financial statements. Bookkeeping provides the basic accounting data by systematical recording such day-to-day financial information as income from the sale of products or services, expenses of business operations such as the cost of the goods sold and overhead expenses (накладные расходы) such as a rent, wages, salaries.
Accounting principles determine which financial events and transactions should be recorded in the bookkeeper's books. The analysis and interpretation of these records is the primary function of accounting. The various financial statements produced by accountants then provide managers with the basis for future financial planning and control, and provide other interested parties (investors, the government) with useful information about the company.
Modern accounting system is considered to be a seven-step cycle. The first three steps fall under the bookkeeping function, such as: 1) the systematic recording of financial transactions; 2) the transferring of the amounts from various journals to general ledger (also called "posting step"); 3) the drawing up of the trial balance.
Record keeping of companies is based on a double-entry system, due to which each transaction is recorded on the basis of its dual impact on the company's financial position. To make a complete bookkeeping record of every transaction in a journal, one should consider interrelated aspects of every transaction, and entries must be made in different accounts to keep the ins (receipts) and outs (payments) balanced.
A typical account is known to have two sides: the items on the left side are called debits, while the items on the right side are credits.
Thus, double-entry bookkeeping doesn't mean that the same transaction is entered twice, it means that the same amount of money is always debited to one account and credited to another account, each record having its own effect on the whole financial structure of the company. Certain accounts are increased with debits and decreased with credits, while other accounts are increased with credits and decreased with debits.
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In the second step in the accounting cycle, the amounts from the various journals are usually monthly transferred to the company's general ledger — a procedure called posting. Posting data to the ledgers is followed by listing the balances of all the accounts and calculating whether the sum of all the debit balances agrees with the sum of all the credit balances. This procedure known as the drawing up of a trial balance and those that follow it usually take place at the end of the fiscal year. By making a trial balance, the record-keeping accuracy can be checked. The trial balance having been successfully prepared, the bookkeeping portion of the accounting cycle is completed.
The double-entry system of bookkeeping enables every company to determine at any time the value of each item that is owned, how much of this value belongs to creditors, the total
profit and how much belongs to the business clear of debt. Thus, one advantage of the double-entry system is that its information is complete enough to be used as the basis for
making business decisions. Another advantage is that errors are readily detected, since the system is based on equations that must always be in balance.
Questions to the text:
- What kind of information is of great importance for proper company management?
- What role does bookkeeping play in the accounting cycle?
- What kind of data is collected by a bookkeeper?
- What is the difference between bookkeeping and accounting?
- Who is interested in obtaining accurate accounting information?
- What is the modern concept of accounting system?
- What tasks should a bookkeeper solve at the first three steps of the accounting cycle?
- What does double-entry bookkeeping mean?
- What data are recorded in the company’s general ledger?
- When is the bookkeeping cycle considered to be completed?
- What are the advantages of the double-entry system?
Accounting Information
Active vocabulary
| Access | Доступ, подход |
| Evaluate | Оценивать, устанавливать стоимость; определять качество |
| Financial performance | Финансовая деятельность |
| Previous | Предыдущий |
| Financial accounting | Финансовая отчетность |
| Managerial accounting | Управленческая отчетность; учет |
| Deal with (dealt) | Иметь дело с…; рассматривать |
| Deal in | Торговать |
| Pricing | Калькуляция цен; ценообразование; установление цен; |
| Capital budgeting | Составление сметы капиталовложений и их окупаемости; расчет рентабельности капиталовложений |
| Spread (spread) | Распространять; распределять |
| Set | Ряд; набор; комплект |
| Financial statement | Финансовый отчет |
| Statement of cash flows | Отчет о движении денежных потоков |
| Income statement | Отчет о доходах |
| Statement of retained earnings | Отчет о нераспределенной (реинвестированной) прибыли |
| Annual report | Ежегодный отчет |
| Annually | Ежегодно |
| Cash flow | Поток наличности; движение денежной наличности, движение ликвидности |
| Inflow cash | Приток наличности |
| Outflow cash | Отток наличности |
| Inflow of assets | Приток активов |
| Outflow of assets | Отток активов |
| Relating to (smth) | Относительно, касательно; относящийся к … |
| Source | Источник |
| Reliable source of information | Надежный источник сведений |
| Generate | Производить; образовывать |
| Disclose | Раскрывать; показывать |
| Disclosure | Раскрытие; сообщение |
| Summarize | Суммировать; резюмировать |
| Net loss | Чистый убыток |
| Render | Отдавать, платить |
| Render a service | Оказывать услугу |
| Render an account for payment | Предоставлять счет к оплате |
| Withdrawal | Отзыв; изъятие; отмена; аннулирование; отказ; снятие со счета; изъятие |
Accounting provides informational access to a company's financial condition for three broad interest groups. First, it gives the company's management the information to evaluate financial performance over a previous period of time, and to make decisions regarding the future. Second, it informs the general public, and in particular those who are interested in buying its stock, about the financial position of the company. Third, accounting provides reports for the tax and regulatory departments (отделы по налогообложению и регулированию деятельностью компании) of the government. In general, accounting information can be classified into two main categories: financial accounting (or public information) and managerial accounting (or private information).
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Managerial accounting deals with cost and profit relationships, efficiency and productivity, planning and control, pricing decisions, capital budgeting, etc. Not being generally spread outside the company, this information provides a wide variety of specialized reports for division managers, department heads, project directors.
A standard set of financial statements is expected to be prepared regularly by financial accounting and published in an annual report at the end of the fiscal year. Being prepared in accordance with generally accepted accounting principles, these statements include the following items: 1) the balance sheet, 2) the statement of cash flows, 3) the income statement, 4) the statement of retained earnings.
Information relating to the financial position of a company, mainly about assets and liabilities, is presented in a balance sheet. The statement of cash flows shows the changes in the company's financial position and provides information which is not available in either an income statement or a balance sheet. Thus, the statement of cash flows represents the sources and the uses of the company's funds for operating activities (управленческая деятельность), applications of working capital and data about additional financial support. Provided the company couldn't generate sufficient cash to finance its activities, it would be necessary to borrow money and it should be indicated in the statement.
Another financial statement disclosing the results of the company's activity is known as the income and expense statement. Prepared for a defined time interval, this statement summarizes the company's revenues, expenses, gains and losses and shows whether a company has made a profit within the period. Income is considered to be the difference between revenues and expenses. If the total expenses exceeded the total revenues during the period, the difference would be the net loss of the company. Revenues are transactions that represent the inflow of assets as a result of operations — that is, the assets received from selling goods and rendering services. Expenses are transactions involving the outflow of assets in order to generate revenue, such as wages, salaries, rent, interest and taxes. In addition to disclosing revenues and expenses, the income statement also lists gains and losses from other kinds of transactions such as the sale of plant assets or the payments of long-term liabilities.
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The income statement excludes the amount of assets withdrawn by the owners, in a corporation such withdrawal of assets being called dividends. The separate statement of retained earnings and stockholder's equity shows investors what has happened to their ownership in the company, how earnings and new stock issuance have increased its value, and what dividends were paid.
Each of these reports contains figures for previous years and for the current period, providing a way of comparing present and past company performance. Being prepared for the use of management, the financial statements contain neither debit nor credit columns. These statements are accompanied by additional data about the particular accounting method used, as well as explanations about the most important events within the previous year.
- Questions to the text:
- Who is interested in accounting information?
- What are the main differences between financial and managerial accounting?
- What financial statements are included in an annual report and when are they published?
- What information can stockholders get from the balance sheet?
- Why is it important to prepare the statement of a company’s cash flows?
- What kind of information is represented in the income statement?
- How can revenues and expenses be defined?
- What statement shows the amount of a stockholder’s dividends?
- Why is it necessary to prepare additional reports?
- What statement contains debit and credit columns?
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