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Debit and credit today were originated from Latin words . which mean .
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5. More sophisticated accounting systems appeared during... when developed
countries began...
6. In the 19th century managers had to develop accounting systems...
7. Strict accountability and many accounting terms, such as "income", for
example, were supplied because...
8. Since the mid- 20th century bookkeeping... and the introduction of computers...
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Accounting
Accounting shows a financial picture of the firm. An accounting department records and measures the activity of a business. It report on the effects of the transactions on the firm financial condition. Accounting records gives a very important data. It is used by management, stockholders, creditors, independent analysts, bank and governments.
Most businesses prepare regularly the two types of records. That is the income statement and balance sheet. These statements show how money was received and spent by the company.
One major tool for the analysis of accounting records is ratio analysis. A ratio analysis is the relationship of two figures. In finance we operate with three main categories of ratios. One ratio deals with profitability, for example, the return on Investment Ratio. It is used as a measure of a firms operating efficiency.
The second set of ratios deals with assets and liabilities. It helps a company to evaluate its current financial structure of the company. It analyses the value of the ownership of the firm.
Notes to the text
Ratio analysis анализ коэффициентов
Profitability прибыльность
Return on investment ratio коэффициент возвращения инвестиций
Answer the questions:
- What is the purpose of accounting?
- Who used the data provided by accounting firm?
- What are the two types of records which most businesses prepare?
- What can you know analyzing the income statement and balance sheet of a company?
- What is the purpose of the ratio analysis?
- What categories of ratio in finance do you know?
Vocabulary Exercise
| 1. An accounting helps … the activity of a business. 2. Do you know the effect of you last … on financial condition of the firm. 3. Accounting records provide … for stockholders, independent analysts. 4. The second type of ratio helps the company … its current financial position. 5. … is one of the two main records which most of the businesses prepare regularly. 6. The … of the company includes real estate in California. 7. I am sure of the … of this transaction. 8. Our company’s current … is very high. 9. They … from the association with that corporation. |
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BOOKKEEPERS, ACCOUNTANTS AND CONTROLLERS
Bookkeepers deal in taxes, cash flow, which includes cash receipts and cash disbursements, sales, purchases and different business transactions of the company.
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Bookkeepers first record all the appropriate figures – in the books of original entry, or Journals. At the end of a period usually a month – the totals of each book of original entry are posted into the proper page of the Ledger. The Ledger shows all the expenditures and all the totals of each account in the Ledger. The bookkeeper prepares a Trial Balance. Trial Balances are usually drawn up every quarter.
The accountant’s responsibility is to analyze and interpret the data in the Ledger and the Trial Balance.
The accountant is to determine the ways in which the business may grow in the future. No expansion or reorganization is planned without the help of the accountant. New products and advertising campaigns are also prepared with the help of the accountant. The work of accountants is rather sophisticated after they pass examinations in Institute of Accountants. Certified accountants in England are called chartered accountants. In the USA the certified accountants are called certified public accountants. But it is not necessary to have a certificate to practice accounting. Junior employees in large companies, for example, often practice accounting and then take examinations. The chief accounting officer of a large company is the Controller, or Comptroller.
Controllers are responsible for measuring the company’s performance. They interpret the results of the operations, plan and recommend future action. This position is very close to the top executives of the company.
Notes to the text:
Chartered accountant бухгалтер, бухгалтер-эксперт, аудитор
(certified public accountant, Am.)
Book бухгалтерская книга
Entry бухгалтерская запись, проводка
To post переносить в главную бухгалтерскую книгу
Ledger главная книга
Earnings доходы
Trial balance пробный баланс
Complete according to the text:
- Bookkeepers deal in …
- Bookkeepers record …
- The Ledger shows …
- Trial balance are drawn up by … every …
- The accountant is to …
- Certified accountants in England are called ….
- Certified accountants in the USA are called ….
- Junior employees …
- The chief accounting officer of a large company is …
- Controllers are … and they …
- This position is very close to …
AUDITOR AND THEIR REPORT
Auditors are usually independent certified accountants who review the financial record of a company. These reviews are called audits. They are usually performed at fixed intervals – quarterly, semiannually or annually. Auditors are employed either regularly or on a part-time basis. Some large companies maintain a continuous internal audit by their own accounting departments. These auditors are called internal auditors.
Not so many years ago the presence of an auditor suggested that a company was having financial difficulties or that irregularities had been discovered in the records. Currently, however, outside audits are a normal and regular part of business practice.
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Auditors see that current transactions are recorded promptly and completely. Their duty is to reduce the possibility of misappropriation, to identify mistakes or detect fraudulent transactions. Then they are usually requested to propose solutions for these problems.
Thus auditors review financial records and report to the management on the current state of the company’s fiscal affairs in the form of Auditor’s Report or Auditor’s Opinion.
Notes to the text:
Irregularity нарушение правил, неправильность
Misappropriation незаконное присвоение
Fraudulent обманный мошеннический
Complete according to the text:
- Auditors are….
- These reviews are called…
- Auditors are employed …
- Currently outside audits are …
- Auditor’s duty is …
- Thus, auditors review …
ADDITIONAL MATERIAL
Семестр
Small Business
The greatest determinant of the success of your business is you, your character and skills. This you must believe if your business is to have any chance of prospering. The type of a person who blames external factors for failure and believes that his own decisions have little impact on the course of events is not suited to building a business. The conventional image of an entrepreneur is of a strong-minded, positive risk-taker with a sense of destiny, seizing the ever-present opportunities.
Motives for starting a business may range from achieving monetary gain for enhancing status to establishing a comfortable working environment. Generally, when people engage in manufacturing or trade, they do so in order to gain wealth and/or power, but their activity is good for all of society. The more goods they make or trade, the more goods people will have. The more people who manufacture and trade, the greater the competition is. Competition among manufacturers and merchants helps all people by providing even more goods and probably at lower prices. This activity creates jobs and spreads wealth.
When it comes to establishing a business in theory, a well-run business should succeed in any market. In practice, however, you can make success more likely by choosing your product and market carefully. Running your own business doesn't mean that you have to be an expert at everything; but you do have to appreciate the importance of likely causes of failure so that you can control your business properly. Most of these causes of failure are a result of lack of skills. Try to require an appreciation of the crucial factors. Watch out for these factors by seeking training or advice from others in these areas in which you are weak.
The conventional view is that your business is more likely to be successful if it fulfils these criteria:
• The people involved realistically assess their strengths and weaknesses and try to overcome short-comings (This is the most important criterion).
• The idea and the market for it has necessary growth potential.
• Financing is sufficient to cover the short-fall of working capital especially in the early days.
If you cannot fulfill these criteria at the moment, do not accept defeat; you may be able to in the future. Most of the processes can be learnt and acquired if your personality allows for realistic self-assessment.
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