General definition of accounting

Today, it is impossible to manage a business operation without accurate and timely accounting information. Managers and employees, lenders, suppliers, stockholders, and government agencies all rely on the information contained in two financial statements. These two reports – the balance sheet and the income statement – are summaries of a firm’s activities during a specific time period. They represent the results of perhaps tens of thousands of transactions that have occurred during the accounting period.

  Accounting is a process of systematically collecting, analyzing, and reporting financial information. The basic product that an accounting firm sells is information needed for clients.

Many people confuse accounting with bookkeeping. In effect, they identify the whole with one of its parts. Actually, bookkeeping is only a part of accounting, the record-making part. Bookkeepers are responsible for recording (or keeping) the financial data that the accounting system processes.  To keep books is to record transactions, and a bookkeeper is one who records transactions either on a computer or manually or with a bookkeeping machine. Accounting includes much more than this. The accountant should have the ability to design the accounting system; to analyze and record complex, non-routine transactions; and to analyze and interpret accounting information.

   The primary users of accounting information are managers. The firm’s accounting system provides the information dealing with revenues, costs, accounts receivables, amounts borrowed and owed, profits, returns on investments, and the like. This information can be compiled for the entire firm; for each product; for each sales territory, store, or individual salesperson; for each division or department; and generally in any way that will help those who manage the organization. Accounting information helps managers to plan and set goals, organize, motivate, and control. Lenders and suppliers need this accounting information to evaluate credit risks. Stockholders and potential investors need the information to evaluate soundness of investments, and government agencies need it to confirm tax liabilities, confirm payroll deductions, and approve new issues of stocks and bonds. The firm’s accounting system must be able to provide all this information, in the required form.

 

3. Give equivalents for the following words and word combinations:

 

Accurate accounting information, timely accounting information, lenders, government agencies, financial statement, balance sheet, income statement, specific time period, basic product, record making part, financial data, non-routing transaction, soundness of investment.

   

4. Answer the questions:

 

1. Who relies on financial statements?
2. What do financial statements contain?
3. What is accounting?
4. What is bookkeeping?
5. Who are the users of accounting information?
6. What are two basic documents of accounting process?
7. What information does accounting system provide?
8. How can accounting information be compiled?
9. In what does accounting information help?

 

Complete the following sentences:

 

1. Managers rely on __________.
2. These two reports are _________.
3. The balance sheet and income statement represent __________.
4. Accounting is a process ________.
5. Bookkeeping is __________.
6. To keep books is __________.
7. The users of accounting information are _________.
8. Accounting information helps _________.
9. Stockholders and potential investors need_______.

UNIT 3

1. Memorize the following words and word combinations:

 

arithmetical techniques - арифметические действия,                                     

                                      арифметичні дії

human aspect          - человеческий фактор, людський фактор          

estimate                  - оценка, оцінка

report                     - отчет. звіт

to be concerned     - иметь отношение, мати стосунок

provision               - предоставление, обеспечение, 

                                  забезпечення

to be involved      - быть вовлеченным, бути залученим

relevant                -   относящийся, доречний

appropriate           - соответствующий, відповідний

subsidiary             - второстепенный, другорядний

2. Read and translate the text:

FOUNDATIONS OF ACCOUNTING

Accounting contains elements both of science and art. The important thing is that it is not merely a collection of arithmetical techniques but a set of complex processes depending on and prepared for people. The human aspect, which many people, especially accountants, forget, arises because:

1. Most accounting reports of any significance depend, to a greater or lesser extent, on people’s opinions and estimates.

2. Accounting reports are prepared in order to help people make decisions.

3. Accounting reports are based on activities which have been carried out by people.

But what specifically is accounting? It is very difficult to find a definition that is all-inclusive.

Accounting provides information in financial terms that helps make decisions.        

Accounting is needed in any society.

An accountant is concerned with the provision and interpretation of financial information. He does not, as an accountant, make decisions. Many accountants do of course get directly involved in decision-making but when they do they are performing a different function.

Accounting is also concerned with reporting on the effects of past decisions. But one should consider whether this is done for its own sake or whether it is done in order to provide information which will prove helpful in current and future decisions. We think that knowledge of the past is relevant only if we can use it in making current and future decisions, for we can hope that we shall be able to influence the future by making appropriate decisions but we cannot redo the past. Thus the measurement of past results is a subsidiary role. But ‘backward looking’ accounting sometimes appears to be an end in itself.

 

3. Answer the questions:

 

1. What elements does accounting contain?
2. What does human aspect arise from?
3. What is accounting concerned with?
4. Why do we think that knowledge of the past is relevant?
5. What is the measurement of the past results?

 

4. Say whether the following is true or false. Use the phrases: Yes, it is true/it is so, I don’t think it is true.

1. Accounting contains elements of art.
2. Accounting does not contain elements of science.
3. Accounting reports are prepared in order to help people make decisions.
4. Accounting reports are based on technical information.
5. An accounting is concerned with technical information.
6. Measurement of past results is a subsidiary role.
7. Knowledge of the past is relevant.

 

5. Fill in the blanks with prepositions:

 

1. Accounting is a set _______ processes depending _______ people.
2. Accounting reports _______ any significance depend ____ people’s estimates.
3. Accounting reports are based _______ activities carries _______ _______ people.
4. Accounting is concerned ______ the provision _______ information.
5. Accounting is needed ______ any society.

 

UNIT 4

1.Memorize the following words and word combinations:

 

to own               - владеть, володіти

asset              - актив,   актив

asset accounts  - счет активов, рахунок активів

fixtures          - встроенное оборудование, вбудоване обладнання   

claims            - требования, претензии; вимоги, претензії     

to owe              - задолжать, быть должным, заборгувати, бути в боргу

stock             - запас, запас, фонд, оборотний капітал

debts             - долги, борги

liability       - обязательства, грошові забов’язання, заборгованість     

tax                - налог, податок, оподаткування

to designate     -  устанавливать, обозначать, установлювати,

                           позначати

owner’s equity - уставной капитал, (акціонерний) капітал (компанії)   

account    - счет, бухгалтерський рахунок бухгалтерського обліку

income           -   доход, прибуток, дохід

expenses         - расходы, затраты, витрати  

ledger             -   главная книга, гросбух, головна книга

net worth        - чистая прибыль, чистий прибуток, зиск

posting           - проводка, бухгалтерське проведення, рознесення в

                          рахунки, занесення в бухгалтерську книгу

cash receipts    - денежные поступления, грошові надходження, дохід

cash disbursement - выплата, виплата

2. Read and translate the text:

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 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.

 

  Journals, or books of original entry, are designed to record information about different transactions, including sales, purchases, cash receipts, cash disbursements, and many others. Journals have two or more columns to record increases or decreases in the accounts affected by the transaction, and they often have space for a date and an ex­planation of the transaction.

 

3.Answer the questions. Start you answer with one of the phrases: It is clear from the text…, As far as I understand…, The author says…:

 

1. What is an asset?
2. What is a liability?
3. What is a capital?
4. What do asset accounts include?
5. What do liabilities include?
6. What are the terms used to designate ‘capital’?
7. What are accounts maintained for?
8. What is the difference between a ledger and a journal?