Task 2. Answer the following questions

1. What is done during the process of accounting and bookkeeping?

2. Where are accounting principles applied?

3. What is the difference between single-entry bookkeeping and a double-entry system?

4. What information is presented an a balance sheet?

5. Who is interested in financial accounting?

6. What does managerial accounting deal with?

7. Who can use managerial accounting information?

8. What is the aim of financial auditing?

 

Text 3. The Double Entry System

Task 1. Read and translate the text.

As you enter information in your books you will always make two entries which exactly balance one another. Each entry has a left side – these are called debits and a right side – these are called credits. For each entry you must enter at least one debit and one credit and the total of the amounts on the right must equal the total on the left. Another “rule” is that debits are positive and credits are negative and if you add them all together the total is “zero”.

If you go to the store and buy a drill you are decreasing your cash in the bank by $129.50. You are increasing your expenses by the same amount – and there you have your two entries. Cash gets the negative entry or credit and small tools gets the positive entry or debit.

All your asset accounts (1000 series) are debit accounts which means they are positive numbers. An asset is a positive number in the system. The liability accounts (2000 series) are called credit accounts and they are negative numbers but generally when you look at them on the balance sheet you don’t show the minus sign.

The 3000 series is sales. Sales are considered a credit account. You sell something and get some cash. Cash is a debit account. Make a sale and you better increase your cash – debit cash. Positive entry.

The 4000 and 5000 series the expense accounts are all debit accounts. You enter an expense as a positive number (debit) to increase your record of what you’ve spent. Whenever you make a purchase of an item that goes to one of your expense accounts you always increase your expense which is a debit.

 

 

Text 4. The Balance Sheet

Task 1. Read and translate the text.

Of the two traditional types of financial statements the balance sheet relates to an entity’s position and the income statement – or profit and loss account – relates to its activity. The balance sheet provides information about an organization’s assets, liabilities and owners’ equity on the last day of the accounting or fiscal period. The format of the balance sheet reflects the basic accounting equation: assets equal equities. Assets are economic resources of the organization. Equities consist of the organization’s liabilities together with the equity interest of its owners. (For example, a certain house has assets worth $70,000: its unpaid mortgage is a liability of $45,000 and the equity of its owners is $25,000).

Assets are categorized as current or long-lived. Current assets are usually those that management could reasonably be expected to convert into cash within one year; they include cash, receivables, merchandise inventory and short-term investments in stocks and bonds. Long-lived assets include land, buildings, machinery, motor vehicles, computers, furniture and fixtures. Lon-lived assets also include intangible such as patents and trademarks.

The Budget. Taxes

Vocabulary

 

budget – бюджет

contain – содержать

corporate tax – корпоративный налог

customs duty – таможенная пошлина

developments – обстоятельства, события

direct tax – прямой налог

economic performance – экономические показатели

excise duties – акцизы

expenditure – расходы

financial year – финансовый год

follow – осуществлять (политику)

forecast – прогноз

income tax – подоходный налог

indirect tax – косвенный налог

issue – выпускать издавать (о документе)

means – средства

objective – цель

property tax – налог на имущество

revenue – доходы

review – рассматривать, делать обзор

sales tax – налог с дохода

set out – излагать

source – источник

statement – заявление, официальный отчет

tax – налог

tax on income – подоходный налог

taxation – налогообложение

value added tax – налог на добавленную стоимость

 

Vocabulary Exercises