The aim of accounting is to show a financial condition of a company. It is an accounting department of a firm that records and measures all relevant financial data of its business activity. There are the two types of records which are the most important ones. They are the income statement and the balance sheet.
Who are the users of accounting records? There is a wide range of different users of these records or, as specialists often say financial reporting or financial statements. They are stockholders, present and potential investors and creditors, management, independent analysts, banks, debtors, competitors, tax bodies, government.
Accounting can be defined as recording and measuring of all financial data concerning a given business or organization activity.
Financial Statements are the central feature of accounting because they are the primary means of communicating important accounting information to users. They show business in financial terms. The most important financial documents are: 1. Profit and Loss Accounts; 2. Balance Sheets; 3. Cash-flow Forecast.
Profit and loss accounts give a history of a companys finances during the previous year for some period. They have three sections:
1. Trading section. It shows the revenue from sales and the costs in producing those sales.
2. Profit and loss section. It shows the costs of general overheads such as administration and distribution.
3. Appropriation section. It shows how the received profit is distributed to shareholders and how much profit remains as reserves.
Balance sheets show the financial position of a company on a certain date. Figurative speaking, a balance sheet provides the so-called a shapshot of a companys wealth at a very given moment of time. It has three sections:
1. Assets (fixed and current);
2. Creditors (current and long-term liabilities);
3. Capital and Reserves (companys issued share capital).
If money is often referred to as the blood of business and accounting is referred as the language of business, then double-entry system may be referred as the eyes of accounting.
The double-entry system of accounting requires that for each transaction there must be one or more accounts debited and one or more accounts credited. So, the rule requires that total debits must equal total credits.
Look at the accounting equation: Assets = Liabilities + Owners Equity.
2. Answer the following questions based on the text.
1) What is the aim of accounting?
2) What are the most important types of records?
3) Who are the users of accounting records?
4) How can accounting be defined?
5) What are the most important financial documents?
6) How many sections are there in balance sheet?
7) What is the essence of the double-entry system?
3. Make up a summary of the text.
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III. Exercises.
1. Match the following phrases in column A with their equivalents in column B.
| Liability | A.Owners equity. |
| Credit | B.The basic record in double-entry |
| bookkeeping. | |
| Journal | C.Something of value to an |
| organization. | |
| Post | D.The test balance of an accounts. |
| Footing | E.The right-hand column of an account. |
| Account | F.The left-hand column of an account. |
| Assets | G.A book of original entries. |
| Trial balance | H.The book that lists all of the |
| accounts. | |
| Proprietorship | I.That which is owed by an |
| organization. | |
| Debit | J.Totaling or adding columns. |
| Ledger | K.To transfer entries from the journal |
| to the ledger. | |
2. Translate the sentences into Ukrainian.
1) She works in accounting.
2) In a centralized accounting system, all cash payments are made by the central accounting office.
3) The company was forced to sell off its assets.
4) Small amounts are usually paid in cash rather than by cheque.
5) Bookkeeping is an essential accounting tool.
6) Each organisation has its own bookkeeping requirements, but all systems operate on the same basic principles.
7) The bookkeepers themselves must be accurate, good in math, and meticulours; that is, they must be very careful to record each detail in its proper place.
3. Translate the sentences into English.
1) .
2) , , , , , , .
3) , .
4) , .
5) .
6) , .
7) , , .
4. Translate the texts into Ukrainian in written form.
Text A
Bookkeepers deal with taxes and cash flow which reflect business transactions of a company, such as sales and purchases, receipts and disbursements.
Bookkeepers first record figures in the books or journals. Of course the books of today are computer files. At the end of each period bookkeepers post the totals of each book into the Ledger.
What is the difference between accountants and bookkeepers?
As we see, bookkeepers are not librarians, who also keep books. They are not bookmakers, who make books. They are specialists who record business transactions and periodically do a trial to see if both sides of an account book match.
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Accountants, however, analyze financial records and decide how to present them. It is a special art to prepare the relevant meaningful financial report from the given data. In short, accountants make financial information understandable for users. The accountant also determines ways in which the business will grow in the future. They help to expand or reorganize the business.
Many accountants pass examinations to get special certificates. In England they are called chartered accountants, while in the USA certified public accountants.
Text B
Accounting
Anything of value that a business or organization owns is commonly known as an asset. Asset accounts include cash, which is the money on hand or in the bank; furniture and fixtures; accounts receivable, the claims against customers that owe money; stock or inventory; office supplies; and many others that show what the organization owns.
Debts owed to creditors are known as liabilities. If money is owed to an organization or a person for things or services purchased on credit, this liability is called an account payable. Other liabilities include wages or salaries that are owed to employees, or taxes that have not yet been paid.
The value of the business to the owner or owners is known as capital. Other terms used to designate capital are proprietorship, owners equity (usually abbreviated OE), ownership, or net worth.
A separate account is kept for each asset, liability, and capital item so that information can be recorded for each of them. Accounts are also maintained for income and for expenses, and like assets, liabilities, or capital, these accounts are also entered in the ledger, which is a detailed listing of all the accounts of an organization. Entries from all the journals are transferred to the ledger at regular intervals. This process called posting is usually done monthly.
5. Translate the text into English.
Text 3
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| UNIT 5 | ||
| INVESTMENT | ||
| I. Active Vocabulary. | ||
| investment | ||
| buying shares | ||
| Stock Exchange | ||
| putting money into a saving account | ||
| real capital goods | ||
| Gross investment | ||
| total output of capital goods | ||
| wear out | ||
| become out of date | ||
| to replace the worn-out and outdate | ||
| equipment | ||
| depreciation | ||
| a stock of capital | ||
| loses its value | ||
| wear and tear | ||
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| obsolescence | |
| net investment | |
| annual increase | |
| rate of net investment | |
| future productivity | |
| aid to developing countries | , |
| make satisfactory economic progress | |
| humanitarian and economic motives | |
| direct foreign investment | |
I. Text.
1. Read and translate the text into Ukrainian.
Investment.
In economics, the word investment does not mean buying shares on the Stock Exchange or putting money into a savings account. The word is used to describe the production of real capital goods. Investment takes place when capital goods are produced. Gross investment is the total output of capital goods during a given period of time, usually one year.
But capital goods are always wearing out or becoming out of date. Some part of the total output of capital goods, therefore, will be required to replace the worn-out and outdated equipment. Depreciation describes the extent to which a stock of capital loses its value owing to wear and tear and obsolescence. (A machine is suffering from obsolescence when it can be replaced by a far more efficient machine.)
Net investment is the annual increase in the total stock of capital. This will obviously be less than gross investment, because some of the new capital will be required to replace the outdated and worn-out capital. Therefore, net investment equals gross investment without depreciation. The rate of net investment in a country is a very important item. It tells us the rate at which that countrys stock of capital is
increasing. Future productivity depends very much on the present rate of net investment.
Also, investment takes place in the form of aid to developing countries. The developing countries will need a great deal of help from the richer countries if they are to make satisfactory economic progress.
There are two main arguments for helping the poorer countries: humanitarian and economic motives. One way in which the stock of capital in poor countries can be increased is by foreign firms setting up factories, mines, quarries, etc. in these countries, and this is described as direct foreign investment.
2. Answer the following questions based on the text.
1) What does the word investment mean in economics?
2) What is this word used to describe?
3) Is gross investment the total output of capital goods during a given period of
time?
4) What is net investment?
5) What does future productivity depend on?
6) How many arguments are there for helping developing countries?
7) What are the ways in which the stock of capital in poor countries can be increased?
3. Make up a summary of the text.
III. Exercises.
1. Match the following phrases in column A with their equivalents in column B.
| 1. | Net investment is the annual increase | A. |
| in the total stock of capital. | ||
| . | ||
| 2. | Gross investment is the total output of | B. |
| capital goods during a given period of | ||
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| time, usually one year. | |
| . | |
| 3. There are two main arguments for | C. |
| helping the poorer countries: | |
| humanitarian and economic motives. | |
| , . | |
| 4. Depreciation describes the extent to | D. |
| which a stock of capital loses its value | |
| owing to wear and tear and | . |
| obsolescence. | |
| 5. Some of the new capital will be | E. |
| required to replace the outdated and | |
| worn-out capital. | : |
| . | |
| 6. Capital goods are always wearing out | F. |
| or becoming out of date. | . |
| 7. Future productivity depends very | G. |
| much on the present rate of net | . |
| investment. | |
2. Translate the sentences into Ukrainian.
1) Apart from the elements that have to be considered in any direct investment, it is good practice to analyze of specific factors with foreign direct investment before proceeding to invest.
2) The decision on a foreign direct investment is generally taken when a relationship has already lasted for a long period between the company of origin and the country where the investment is planned.
3) In cases where the country is an outlet for the company, foreign direct investment is normally part of an entry strategy.
4) The company has usually first been developing the market via exports.
5) The investment is made, for example, when sales volumes and market knowledge have grown sufficiently to allow investment (via a take-over on new production resources) in a permanent production, sales and/or distribution organization.
6) In cases of imports from the country, the decision may actually be taken to start producing in the country, by taking over the supplier or installing ones own production capacity.
7) In many cases the process of decision-making on a foreign direct investment therefore does not entail any selection from a number of countries.
3. Translate the sentences into English.
1) , .
2) , , , .
3) .
4) , 㳿.
5) - .
6) , , .
7) , .
4. Translate the texts into Ukrainian in written form.
Text A
Since an investment generally tie a company for a long period to a particular country with a particular geographical coverage, it is important to analyze and produce a long-term forecast of the trend in costs of and the demand for products from the planned unit. The general macroeconomic situation, how it will develop and its stability are very important factors.
At a general level, the trend in cost and the scale and composition of demand are determined by the cyclical situation in the macroeconomy, that is, the scale and growth in total and per capita GNP, interest rates, inflation and the trend in purchasing power. These are determined partly by the international economic situation, and partly by government policy.
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Broadly speaking, there are two views of the role that the government can and should play in the economy, the economic structure and the way it develops: an intervening role or a role of restraint.
Some countries conduct an active economic policy, with the government attempting to offset falling demand during a recession by additional expenditure, increasing the money supply and temporary tax reductions. It is hoped that this additional expenditure will give a boost to the economy via rising demand in response to a fall in interest rates, and rising exports in response to a fall in the exchange rate.
Other countries pursue a policy aimed at structurally reducing the size of the civil service in relation to the economy and strengthening the working of market forces, and improving the general investment climate by curbing the government deficit, reducing regulations and investing in infrastructure and education. Governments make relatively few attempts to influence the economy. The development of sectors is left to the market, which is exposed to international competition. Monetary and budgetary policies are restrictive.
Text B
The global economic interdependence of the United States and other nations has grown geometrically since the Second World War. It is evidenced in resource utilization, production decisions, raw materials trade and consumer demand. It can be seen in such efforts to create order in international economic relationships as the International Monetary Fund, the World Bank and the General Agreement on Tariffs and Trade. It has also been demonstrated through the wide-ranging effects of single dramatic events, such as each of the oil price shocks of the 1970s.
Another sign of increased interdependence is the growth of foreign investment. In 1989, U.S. direct investment in other countries grew to $373,4 thousand-million, up from $207,8 thousand-million in 1982, valued historically. Foreign direct investment in the United States grew even faster, rising $400,8 thousand-million in 1989 from only $124,7 thousand-million in 1982, as measured by the same valuation. Through foreign investment, the U.S. industry has helped develop major industries in other countries, such as copper production in Chile main source of foreign exchange for that country.
5. Translate the text into English.
Text
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г , , , , , . , 㳿. , . , ,
, , ( ) , / . , , . , , .
. , , , . , - . , ; .
, , , , .
PART II
