Module 1 Types of businesses

Казань 2012

УДК 811.111:378

ББК Ш13(Англ)-923

Рецензенты:

 

Гизатова Г. К., заведующая кафедрой иностранных языков

Казанского государственного аграрного университета, д. филол. н, доцент;

О.П. Таркаева, и. о. директора Института языка К(П)ФУ, доцент, к. пед. н.

 

Learningenglish2.ru: Учебное пособие по английскому языку для студентов экономических специальностей / под редакцией Е.М. Галишниковой, Р.М. Марданшиной, О.В. Поляковой, Л.В. Хафизовой. – Казань: Изд-во КФУ, 2012. – 131 с.

 

ISBN

Данное учебное пособие – преемственное продолжение учебного пособия «Learningenglish1.ru», адресованное студентам экономических факультетов. Материалы пособия направлены на формирование общекультурной, коммуникативной и профессионально-направленной компетенций студентов, изучающих английский язык. Структура пособия представляет собой ряд учебных модулей, содержащих аутентичные тексты экономического профиля, отбор которых осуществлялся на основе сопутствующих и опережающих междисциплинарных связей. Для каждого модуля характерно наличие текстов, упражнений, тренирующих и закрепляющих различные навыки работы с текстами, задания для освоения активной лексики, совершенствования навыков устной речи. Грамматический материал представлен в отдельном модуле, в котором, помимо теоретической части, содержатся разнообразные тренировочные упражнения. Пособие содержит англоязычный вокабуляр по каждому модулю.

Для студентов экономических специальностей.

 

УДК 811.111:378

ББК Ш13(Англ)-923

 

ISBN Коллектив авторов, 2012

ПРЕДИСЛОВИЕ

Данное учебное пособие предназначено для студентов экономических факультетов.

Целью учебного пособия является формирование общекультурной и коммуникативной компетенций студентов средствами английского языка, что предполагает владение понятийным аппаратом экономического и финансового профиля, знание грамматических структур, стилистических особенностей английского языка, расширение и закрепление навыков чтения оригинальных текстов, подобранных на основе междисциплинарных связей, использование речевых образцов, развитие умений студентов самостоятельно высказываться в устной и письменной формах.

Пособие состоит из четырех разделов, в каждом по три модуля, что помогает тематически структурировать материал. Каждый раздел содержит несколько основных текстов, задания к ним способствуют формированию умений извлекать информацию из прочитанного материала, самостоятельно высказываться по предложенной тематике. Содержание модулей позволило объединить важные составляющие речевой деятельности: чтение, говорение, аудирование, письмо.

Особое внимание уделяется усвоению грамматического материала, представленного в учебном пособии с опорой на экономическую терминологию. Разнообразные упражнения предназначены для закрепления и контроля грамматических явлений.

Лексическая составляющая пособия отражает достаточный набор терминов и понятий экономического и финансового профиля, что способствует формированию понятийно-терминологического аппарата будущего специалиста и позволяет студентам вести беседу на темы, связанные со специальностью. В начале каждого модуля предлагается активный лексический минимум.

Тематика учебного пособия включает: Organizations (Types of Businesses, Alliances, Management), Marketing (Marketing, Marketing Mix, Advertising), Finance (Investments, Banking, Accounting), Global Forces (Globalization, International Trade, Business Correspondence).

Учебное пособие содержит аутентичные тексты для дополнительного чтения, которые можно использовать для самостоятельной работы студентов (модуль Additional Reading).

Материалы учебного пособия прошли апробацию в Институте экономики и финансов К(П)ФУ на кафедре иностранных языков в сфере экономики, бизнеса и финансов.

Разделы учебного пособия разработаны преподавателями кафедры:

Раздел 1 – Григорьева Е.В., Калганова Г.Ф., Кудрявцева М.Г., Марданшина Р.М., Мосолкова М.Г., Полякова О.В.

Раздел 2 – Баклашова Т.А., Галишникова Е.М., Пантелеева М. В., Хусаинова А.А.

Раздел 3 – Валеева Л.А., Галишникова Е.М., Исмагилова Л.Р., Пимурзина А. А., Файзулина А.В., Шалдымова О.В.

Раздел 4 – Абдуллина Л. Г., Журавлева Е.Е., Заляева Е.О., Сиразеева А.Ф., Хафизова Л.В.

Раздел Grammar – Большакова Ю.А., Галишникова Е.М., Марданшина Р.М.

Раздел Additional Reading - Галишникова Е.М., Григорьева Е.В., Журавлева Е.Е., Калганова Г.Ф., Кудрявцева М.Г., Полякова О.В., Файзулина А.В., Пимурзина А. А.

Редакционная коллегия: профессор, д.п.н. Галишниковa Е.М., доцент, к. с. н. Полякова О.В., ст. преп., к.п.н. Марданшина Р.М., ст. преп. Хафизова Л.В.

 

CONTENTS

 

 

UNIT 1

ORGANISATIONS

Partnerships

Partnerships are businesses owned by two or more people but no more than twenty. They share profit usually by agreement according to their contributions. Doctors, dentists and solicitors are typical examples of professionals who may go into partnership together and can benefit from shared expertise. Some advantages of partnership are that there is someone to consult on business decisions and more capital.

The main disadvantage of a partnership comes from shared responsibility. Disputes can arise over decisions that have to be made, or about the effort one partner is putting into the firm compared with another. Like a sole trader, partners have unlimited liability. Moreover there is more paperwork and interpersonal relations between partners may require both time and tact.

There may also be “sleeping partners” who own a share of the business contributing capital to the business, but do not participate in its organization and management.

 

Limited companies

A limited company is incorporated, which means it has its own legal identity and can sue or own assets in its own right. The ownership of a limited company is divided up into equal parts called shares. Whoever owns one or more of these is called a shareholder.

As limited companies have their own legal identity, their owners are not personally liable for the firm's debts, only for the amount of contributed capital. The shareholders have limited liability, which is the major advantage of this type of business structure.

To form a corporation one should apply for a corporate charter. Obtaining the charter the stockholders, as owners, hold a meeting to organize the corporation, elect the Board of Directors and choose the company's officers. Though the officers of the company supervise daily management, the stockholders always have the final authority. They vote at annual meetings.

Unlike a sole trader or a partnership, the owners of a limited company are not necessarily involved in running the business, unless they have been elected to the Board of Directors.

There are two main types of limited company:

A private limited company (Ltd) is often a small business such as an independent retailer in a market town. There is a restriction on the number of members from 2 to 50. There are also restrictions on the transfer of shares which are not traded on the stock exchange.

A public limited company (plc. ) is usually a large, well-known business. The number of members from 7 and no limit above this. This could be a manufacturer or a chain of retailers with branches in most city centers. Shares are traded on the stock exchange freely.

Franchising

An entrepreneur can opt to set up a new independent business and try to win customers. An alternative is to buy into an existing business and acquire the right to use an existing business idea. This is called franchising.

A franchise is a joint venture between:

• A franchisee, who buys the right from a franchisor to copy a business format.
• And a franchisor, who sells the right to use a business idea in a particular location.

Many well-known high street opticians and burger bars are franchises. Opening a franchise is usually less risky than setting up as an independent retailer. The franchisee is adopting a proven business model and selling a well-known product in a new local branch.

There is one more type of business organization that is different from the above ones. A non-profit corporation is usually created with a specific purpose, such as for educational, charitable, civic or artistic. Nonprofits are generally exempt from federal and state taxation on their income.

 

 

D. Choose the correct answer according to the information from the text:

1. What is the main advantage of being a sole trader?
a) unlimited liability	b) limited liability	c) be able to make quick decisions
2. Who is limited liability an advantage to?
a) shareholders	b) stakeholders	c) sole traders
3. What is a partnership?
a) a business owned by shareholders	b) one person trading alone	c) two or more individuals trading together
4. Who is a company controlled by?
a) shareholders	b) stakeholders	c) managers
5. What is a business that sells the right to use a business idea?
a) a franchisor	b) a franchise	c) a franchisee
6. Which of the following is NOT an advantage offered by a franchise?
a) a prime location	b) a tested product	c) a well-known brand
7. Who is a franchise bought by?
a) a franchisor	b) a franchisee	c) a wholesaler
8. Which type of business does NOT usually have limited liability?
a) a public limited company	b) a multinational	c) a partnership
9. Who has legal responsibility to settle debts in a company with unlimited liability?
a) owners	b) shareholders	c) stakeholders

E. Complete sentences using information from the text:

1) If you are sole trader you can …

2) The main advantage of partnership is …

3) Shareholders are the …

4) To have limited liability means …

5) If you go into business alone, it’s called …

6) Educational, religious and charitable institutions are …

7) In a private limited company all shareholders must agree before …

8) To have unlimited liability means …

9) Having a partner you don’t have to …

10) Sleeping partners are …

 

F. Fill in the table and in groups compare and contrast types of businesses.

	Sole trader	Partnership	Ltd	PLC
membership
capital
liability
ownership and control

 

Reading 2: Types of organization structure

HUMAN RESOURCES DEPARTMENT

Setting up a successful business requires careful preparation and planning. There are a number of questions that all entrepreneurs must ask themselves concerning the products or services that they intend to sell, the competition that they will face, the structure of the business itself and the sources of finance that they will need to open their new venture. This means that all of these parameters must be defined in a business plan: a document that shows how the entrepreneur will organize his or her business, how much he or she expects to sell and where the capital will come from. Once this information has been put down on paper, the entrepreneur can then choose an appropriate form for the company, register it with the authorities and open a business.

Synergy

Synergy is the magic force that allows for enhanced cost efficiencies of the new business. Synergy takes the form of revenue enhancement and cost savings. By merging, the companies hope to benefit from the following:

• Staff reductions. As every employee knows, mergers tend to mean job losses. Consider all the money saved from reducing the number of staff members from accounting, marketing and other departments. Job cuts will also include the former CEO, who typically leaves with a compensation package.
• Economies of scale. Size matters. Whether it's purchasing stationery or a new corporate IT system, a bigger company placing the orders can save more on costs. Mergers also translate into improved purchasing power to buy equipment or office supplies - when placing larger orders, companies have a greater ability to negotiate prices with their suppliers.
• Acquiring new technology. To stay competitive, companies need to stay on top of technological developments and their business applications. By buying a smaller company with unique technologies, a large company can maintain or develop a competitive edge.
• Improved market reach and industry visibility. Companies buy companies to reach new markets and grow revenues and earnings. A merge may expand two companies' marketing and distribution, giving them new sales opportunities. A merger can also improve a company's standing in the investment community: bigger firms often have an easier time raising capital than smaller ones.

 

Varieties of Mergers

From the perspective of business structures, there is a whole host of different mergers.

Here are a few types, distinguished by the relationship between the two companies that are merging:

o Horizontal merger. Two companies that are in direct competition and share the same product lines and markets.

o Vertical merger. A customer and company or a supplier and company. Think of a cone supplier merging with an ice cream maker.

o Market-extension merger. Two companies that sell the same products in different markets.

o Product-extension merger. Two companies selling different but related products in the same market.

o Conglomeration. Two companies that have no common business areas.

 

Foundation documents

Foundation documents include the Agreement between the раrtners оn the establishment of а joint venture and the Charter оr Statute of а joint venture. These documents outline the legal status of а joint venture, the funds raised, Management and Personnel and some other provisions.

Feasibility study

The Feasibility Study is jointly prepared bу the partners involved. It covers the objective of а соmраnу, the working capital, the product to bе manufactured, the marketing possibilities, the technical back-up of а project. Only after registration the соmраnу mау ореn а bank account and conclude agreements and contracts in its own nаmе.

Management and personnel

А joint venture must bе managed bу а Board of Directors represented bу the Russian and foreign participants. The Board is а governing body which sets out the strategy of а соmраnу. Day-to-day management must bе determined bу а Directorate formed from Russian and foreign citizens.

Formation of funds

The authorized fund is formed from initial contributions made bу the Parties and mау bе supplemented from the profits of а joint venture. Contributions to this fund mау bе made in cash and in kind. А joint venture is obliged to establish а reserve fund of 25 per cent of the value of the authorized fund. It is formed bу way of annual deductions from the profits of а joint venture. Contributions tо this fund аге tax-free.

The research and development fund is created tо develop production. It is viewed аs reinvestment and is tах deductible. All the other funds created bу а joint venture аrе taxed.

Profits

After deductions have bееn made to the funds, the rest of the profit is divided between the partners in proportion to their share in the authorized fund.

The profit due to the foreign partner mау bе placed in the bank, spent within the country оr repatriated abroad. Profits mау bе transferred from Russia to foreign countries bу way of import substitution.

А joint venture is subject to а tах оn its profits. According to the tax regulations а joint venture is exempt from the profit tax for 2 years. The tах holiday begins from the moment profits аге first made bу а joint venture.

Legal status

А joint venture is а legal person. It mау sue and bе sued and mау also appeal to Russian and third party courts. In case of dissolution the foreign participant has the right to recover the initial contribution which he made to the authorized fund.

 

Think about arguments for and against leveraged buyouts and hostile takeovers. Which do you find most persuasive? Present your ideas to the class and think of any further arguments either for or against.

 

Over to you

A. Quick management test.

1) Every successful business is dependent on good …

manages

management

managerial

manager

2) It is said that good management has always been the invisible ingredient of …

successfully

succeed

successful

success

3) Management gurus are people whose role is to … and spread around new and effective management practices.

interpretation

interpret

interpreted

interpreter

4) Peter Drucker[6] is the management guru who … the notion of 'management by objectives'.

inventor

inventive

invention

invented

5) Successful gurus are adept at … management theory and practice response to a constantly changing world.

reformulation

reformulating

reformulate

reformulates

6) Effective management in a turbulent world is … the major international challenge for business.

increasingly

increasing

increased

increase

7) Douglas McGregor² … two main styles of management: X-Theory which is authoritarian, autocratic and repressive; and Y-Theory which is participative, delegating, and developmental.

defined

defining

has defined

was defined

Reading 1: Basics of Management

E. Make up the role-play.

You are the personnel manager of a company which was created only 5 years ago and is rapidly expanding. At the moment your company needs a production manager (possible variants: sales manager, purchasing manager, assistant general manager, public relations manager, research and development manager, marketing manager).Conduct an interview with an applicant for the post of the production manager (and possible variants).Explain the nature of the job. Ask questions about the applicants’ personal background, his\her personal and business characteristics, find out why the applicant applies for the job, what salary he\she expects.

UNIT 2

MARKETING

Module 1 Marketing

 

Starting up

A. Answer the questions.

v How do you understand the word “marketing”?

v Who are the participants in marketing?

v Can you say that marketing is all around us? Why?

v What malls do you usually go to? What do you buy there?

v How can you define “goods” and “services”?

 

B. Check your suppositions.

Marketing is the process of developing, promoting, and distributing products in order to satisfy customer’s needs and wants. Products include both goods and services. Goods are the kinds of things you can touch or hold in your hand. Hammers, automobiles, clothing, and computers are goods. Services are the kinds of things you can’t physically touch. They consist of a series of tasks performed for a customer. Dry cleaners, amusement parks, movies, theatres provide services.

 

Topical Vocabulary

 

marketing	торговля, продажа, сбыт; маркетинг
distribution	распределение; раздача
ultimate objective	конечная цель
to satisfy/meet customer needs	удовлетворять потребности покупателей
profitability	прибыльность, рентабельность, доходность
to generate/make profit	получать прибыль
consumer good	потребительские товары, товары народного потребления
industrial goods	промышленные изделия
marketing research	маркетинговое исследование, маркетинговый анализ
product life cycle	жизненный цикл товара/продукта
«business-to-business» marketing	промышленный маркетинг (маркетинг товаров промышленного назначения)
to be guided by	руководствоваться чем-либо

Reading 1: Marketing

C. Answer the questions.

1) What activities does marketing consist of?

2) What are two basic principles of marketing?

3) What do marketing operations include?

4) Is satisfying customer needs the only objective of a firm?

5) What groups of goods is it customary to organize marketing sectors into?

6) What consumer goods do you know? Whom are these goods bought by?

7) How do we understand the expression “business-to-business” marketing?

8) What kinds of services do you know?

Over to you

 

Think of a product you know or buy regularly, and about how the company markets it. Who is their target market? What are their objectives? Find out what you can about the company. What is their market share? Who are their competitors?

 

Functions of Marketing

F. Answer the questions.

1) What is the idea of a marketing concept?

2) What are the main stages of the product life cycle?

3) What does the length of the product life cycle depend on?

4) What does the price depend on?

5) How can prices be determined?

6) Where can customers see the products?

7) What forms of marketing communication does promotion include?

8) What should companies be guided by in order to be efficient under market economy?

9) How does marketing research help a marketer?

 

 

Reading 2: Market segmentation

 

F. Answer the questions.

1) What is market segmentation?

2) What does the segmentation allow marketers?

3) How do UK marketers classify customers demographically?

4) Will you describe marketers’ classifying customers demographically in the UK?

5) What is a system ACORN?

6) Which factors are important in lifestyle segmentation?

7) Would you explain the notion “psychographics”?

 

Listening: An interview with a marketing manager

(Market leader, CB, Intermediate Business English by D. Cotton, Unit 4)

 

Over to you

 

v Which demographic segment in B opposite do you belong to?

v Think of a product you have bought recently and analyze your purchase in terms of behavioural segmentation.

v Do the VALS questionnaire and get your own VALS profile at the SRI Consulting Business Intelligence site: www.sric-bi.com

Module 3 Advertising

 

Starting up

Discuss in pairs.

v Did you buy something on the basis of the advert?

v Do you think that advertising using children or animals are acceptable?

v Do you agree with the AIDA model for advertising?

Catch the audience’s Attention Make them Interested Create Desire State the Actionthe audience should take

 

v Analyze any ads you have seen lately using four stages in promoting a product.

 

Reading 1: Advertising & Promotion

D. Discuss in groups.

1) Where do you see a lot of advertising?

2) What advertising campaigns are famous in our country?

3) What commercials do you like?

4) What cannot be advertised on TV in our country?

5) Advertising can influence people's behavior, sometimes - as in a case of the anti-smoking campaign – with very positive results. In what other fields could advertising play a beneficial role?

6) What advertisements and promotional activities does your company use?

Discussion: Advertising via the internet is a new medium

B. Investing in your future

Each of us has a set of goals that we want to achieve in our lives: going to college, getting married, buying a car or house, or taking a vacation. In order to achieve your goals, think about how much money you need to afford your “dreams”. Create a timeline of your goals and write about how you plan to achieve them through long-term saving and investing.

 

Timeline of the goals

Year	Event	How I plan to achieve the goal
________ ________ ...	__________________ __________________ …	________________________________________ ________________________________________ …

 

 

Reading 1: Commodity and Stock Exchanges

A. Study the topical vocabulary.

exchange	обмен, торговля; биржа
stock exchange	фондовая биржа
stock market	рынок капитала, фондовый рынок
stock(s)	1) ценные бумаги, сертификаты акций, облигаций 2) акционерный капитал корпораций
share(s)	1) часть, доля; пай (во взаимном фонде) 2) акция, ценная бумага
equity	1) капитал компании 2) обыкновенная акция
securities	ценные бумаги
gilt-edged securities (gilts)	правительственные ценные бумаги с государствен­ной гарантией, считаются наиболее надежными инвестиционными активами
bond	облигация, ценная бумага с фиксированным доходом
grade	класс, сорт, сортировка
to grade	разместить товар на товарных биржах по сортам и качеству
supply and demand	предложение и спрос
listed securities	котируемые (на бирже) ценные бумаги
listed companies	компании, акции которых котируются на фондовой бирже
listing	«листинг», допуск ценной бумаги к официальной котировке
free economies	страны с рыночной экономикой
to raise capital	привлечь капитал
investment products	различные виды инвестиций
individual investors	инвесторы: физические лица
institutional investors	инвесторы: юридические лица
securities firms	холдинг-компании
dealers with assigned responsibility	дилеры, уполномоченные вести операции с ценными бумагами
financial record	данные о финансовом состоянии
to fund	финансировать
to fund shortfall	покрывать дефицит

 

C. Find pairs of synonyms.

1) stocks	diversity
2) to fund	to authorize
3) variety	full
to deal in	to define
to determine	to influence
overseas	foreign
to entitle	to finance
shortfall	securities
to affect	to trade in
complete	deficit

Part 1

A. Choose three companies from different sectors that interest you (entertainment, technology, telecommunications, food, cosmetics, transportation, etc.) and fill in the information that you obtain from your research. Then, based on your research, write a report analyzing these companies and graph their stock prices for the past six months.

Company Name:______ Symbol:_____________ History:_____________ Management:________ Products:____________ Income Analysis:______

B. Read the text.

Commercial banks render services to the business community, as well as to the general public. The functions of banks are divided into Primary and Secondary ones. Primary functions are the main activities generating the main profit and obligatory on the part of bank to perform while secondary are not the main sources of income of the banks.

The primary functions of a commercial bank include accepting deposits granting loans and advances.

The most important activity of a commercial bank is to mobilise deposits from the public or Accepting deposits. People who have surplus income and savings find it convenient to deposit the amounts with banks. Depending upon the nature of deposits, funds deposited with bank also earn interest. If the rate of interest is higher, public are motivated to deposit more funds with the bank. There is also safety of funds deposited with the bank. Banks accepts deposits from the public and their customers in the form of Current deposit, Saving, deposit, fixed deposit, and under other deposit schemes.

Current Deposit can be withdrawn by the depositor at any time by cheques. Businessmen generally open current accounts with banks. Current accounts do not carry any interest as the amount deposited in these accounts is repayable on demand without any restriction.

Savings deposit account is meant for individuals who wish to deposit small amounts out of their current income. It helps in safe guarding their future and also earning interest on the savings. A saving account can be opened with or without cheque book facility. There are restrictions on the withdrawls from this account.

The term ‘Fixed deposit’ means deposit repayable after the expiry of a specified period. Fixed deposits are most useful for a commercial bank. Since they are repayable only after a fixed period, the bank may invest these funds more profitably by lending at higher rates of interest and for relatively longer periods. The longer the period, the higher is the rate of interest offered.

The second important function of a commercial bank is to grant loans and advances. Such loans and advances are given to members of the public and to the business community at a higher rate of interest than allowed by banks on various deposit accounts. The rate of interest charged on loans and advances varies depending upon the purpose, period and the mode of repayment. The difference between the rate of interest allowed on deposits and the rate charged on the Loans is the main source of a bank’s income.

Cash credit is an arrangement whereby the bank allows the borrower to draw amounts up to a specified limit. The amount is credited to the account of the customer. The customer can withdraw this amount as and when he requires.

Overdraft is also a credit facility granted by bank. A customer who has a current account with the bank is allowed to withdraw more than the amount of credit balance in his account. It is a temporary arrangement. Overdraft facility with a specified limit is allowed either on the security of assets, or on personal security, or both.

Besides the primary functions of accepting deposits and lending money, banks perform a number of other functions which are called Secondary functions. They are therefore could be subdivided into agency (transfer of funds, collection of checks, portfolio management, periodic collection, i.e. collection of salary, pension, dividend etc.) and general utility functions (issue of drafts and letters of credit, locker facility, i.e. safe custody of valuables, underwriting of shares, dealing in foreign exchange. Agency services are rendered as agent of customers, whereas general utility services are rendered to the general public.

Banks have now installed their own Automated Teller Machine (ATM) throughout the country at convenient locations. By using debit & credit cards, customers can deposit or withdraw money from their own account any time.

Having saving or current account in the banks a customer is provided with Debit cards. The amount paid through the card is automatically debited (deducted) from the customers’ account.

Credit cards are issued by the bank to persons who may or may not have an account in the bank. Just like debit cards, credit cards are used to make payments for purchase, so that the individual does not have to carry cash. Banks allow certain credit period to the credit cardholder to make payment of the credit amount. Interest is charged if a cardholder is not able to pay back the credit extended to him within a stipulated period. This interest rate is generally quite high.

With the extensive use of computer and Internet, banks have now started transactions over Internet or Net- banking. The customer having an account in the bank can log into the bank’s website and access his bank account. He can make payments for bills, give instructions for money transfers, fixed deposits and collection of bill, etc.

In case of Phone banking, a customer of the bank having an account can get information of his account, make banking transactions like, fixed deposits, money transfers, demand draft, collection and payment of bills, etc. by using telephone or mobile phone.

 

C. Read the text.

 

Accounting frequently offers the qualified person an opportunity to move ahead quickly in today's business world. Indeed, many of the heads of large corporations throughout the world have advanced to their positions from the accounting department. In industry, management, government, and business, accountants generally are near the top rather than near the bottom of the organization chart. Management relies on the expert knowledge and experience of accountants to cope with the increasingly complex problems of taxes and cash flow.

Accounting is a basic and vital element in every modern business. It records the past growth or decline of the business. Careful analysis of these results and trends may suggest the ways in which the business may grow in the future. Expansion or reorganization should not be planned without the proper analysis of the accounting information; and new products and the campaigns to advertise and sell them should not be launched without the help of accounting expertise.

Government officials often have a legal background*; similarly, the men and women in management often have a background in accounting. They are usually familiar with the methodology of finance and the fundamentals of fiscal and business administration.

 

* * *

Today, a sharp distinction is made between the relatively unchanged work performed by a bookkeeper and the more sophisticated duties of the accountant. The bookkeeper performs the routine work of recording figures in the books, whereas the duties of an accountant extend far beyond* the actual making of records. Accounting is concerned with the use to which these records are put, their analysis and interpretation. An accountant should be studying the various alternatives open to the business, and be using his accounting experience in order to aid the management to select the best plan of action for the business.

Accounting is often said to be the language of business. It is used in the world to describe the transactions entered into* by all kinds of organizations. Accounting terms and ideas are therefore used by people associated with business, whether they are managers, owners, investors, bankers, lawyers, or accountants.

The owners and managers of a business will need some accounting knowledge in order that they may understand what the accountant is telling them, Investors and others will need accounting knowledge in order that they may read and understand the financial statements issued by the business, and adjust their relationships with* the business accordingly.

Probably there are two main questions that the managers or owners of a business want to know: first, whether or not the business is operating at a profit; second, they will want to know whether or not the business will be able to meet its commitments as they fall due*, and so not have to close down owing to lack of funds. Both of these questions should be answered by the use of the accounting data of the firm.

* * *

The field of accounting is divided into three broad divisions: management, public and governmental accounting.

An accountant who is employed by a business is said to be in management accounting. Managerial (management) accountants work with the kinds of financial reports necessary to management for the efficient operation of the company. As companies grow, they are working under a chief accounting officer called a controller (or comptroller as he or she is often called), or financial vice-president. Other positions that may be held by accountants at lower managerial levels are assistant controller, internal auditor, system analyst, financial accountant, and cost accountant. Those who work for manufacturing concerns are sometimes called industrial accountants.

Internal auditorsare in charge of the protection of the firm's assets. The internal auditor sees that* current transactions are recorded promptly and completely. He or she also identifies inefficient procedures or detects fraudulent transactions.

The field of public accounting offers services in auditing, taxes, and management consulting to the public for a fee. A certified public accountant or CPA. as the term is usually abbreviated, must pass a series of examinations, after which he or she receives a certificate. The most important and distinctive function of a certified public accountant is auditing, which is the examination and testing of financial statements. Society relies heavily on the auditing function for credible financial reports.

As the tax laws have grown increasingly complex, not only corporations but also individuals need to have their tax liability calculated. So, public accountants assist businesses and individuals in preparing tax returns* and complying with* tax laws.

A growing and important part of most public accounting firms’ practice is management advisory services, or consulting. With their intimate knowledge* of business’s operations, auditors can make important suggestions for improvements in the last few years. These recommendations have expanded into marketing, organizational planning, personnel and recruiting, production systems, and many other business areas.

Many accountants work in government offices or for nonprofit organizations either regularly or on a part-time basis. These two areas are often joined together under the term «governmental and institutional accounting».

 

Notes

sees that - следит за тем, чтобы

tax returns - сведения о доходах, облагаемых налогом

complying with the law - приведение в соответствие с законом

with the intimate knowledge - благодаря их близкому знакомству

on a part time basis - на основе почасовой оплаты

 

D. Fill in the blanks.

1) Management accountants work with the …

2) Chief accounting officer is called a … or … … …

3) Industrial accountants work for …

4) … are in charge of the protection of the firm’s assets.

5) A … … … must pass a series of examinations.

6) … … assists business in preparing tax returns.

7) Management accounting services are … … of … …

 

B. Read the text.

The whole of financial accounting is based on the accounting equation. The resources possessed by the firm are known as Assets, and obviously, some of these resources will have been supplied by the owner of the business. The total amount supplied by him is known as Capital (Owners’ equity), if in fact he was the only one who had supplied the assets then the following equation would hold true:

Assets = Capital (Owners’ equity)

On the other hand, some of the assets will normally have been provided by someone other than* the owner. The indebtedness of the firm for these resources is known as Liabilities. The equation can now be expressed as:

Assets = Capital (Owners’ equity) + Liabilities

Assets are economic resources owned by a business that are expected to benefit future operations. Assets consist of property of all kinds, such as inventories (goods held for sale), land, buildings, machinery and motor vehicles (nonmonetary physical things), also benefits such as debts owing by customers and the amount of money in the bank account (monetary items called also account receivable). Other assets – the rights granted by patent, trademark, or copyright – are nonphysical.

Liabilities consist of money owing for goods supplied to the firm, and for expenses, also for loans made to the firm. So we can say that liabilities are present obligations of a business to pay cash, transfer assets, or provide services. Among these obligations are debts of the business, amounts owed to suppliers as we said above and services bought on credit (called account payable), borrowed money, salaries and wages owed to employees, taxes owed to the government.

Capital is often called the owner's equity or net worth. Owners’ equity represents the claims of a business to the assets of the business. Theoretically, it is what would be left over if all the liabilities were paid and sometimes is said to equal net assets. By rearranging the accounting equation, we can define owners’ equity this way:

Owners’ equity = assets – liabilities

The owners’ equity of a corporation is called stockholders’ equity, so the accounting equation becomes:

Assets = liabilities + stockholders’ equity

Stockholders’ equity has two parts: contributed capital and retained earnings:

Stockholders’ equity = contributed capital + retained earnings.

Contributed capital is the amount invested in the business by the stockholders. Retained earnings represent the equity of stockholders generated from the income –producing activity of the business and kept for use in the business.

Simply stated, revenues and expenses are increases and decreases in stockholders equity that result from operating a business. Generally speaking, a company is successful if its revenues exceed its expenses. When revenues exceed expenses, the difference is called net income; when expenses exceed revenues, the difference is called net loss.Net income – or net loss – is of course, “the bottom line”, and discloses whether or not a company has been profitable for a given period. Dividends are distributions to stockholders of assets (usually cash) generated by past earning. It is important not to confuse expenses and dividends, both of which reduce retained earnings.

 

Notes

a legal background - юридическое образование

extend far beyond - выходить далеко за рамки

entered into - в которых участвуют

adjust relationships with - строить отношения с…

as they fall due - когда придёт срок (погашения)

other than - помимо, кроме

put to use - использовать, употребить

 

B. Read the text.

Classifying assets. Assets may be grouped according to the degree of liquidity or the expected conversions to cash or the time it takes to use up the assets. For analytical purposes, assets are classified as follows:

Current assets are cash and other assets that can reasonably be expected to be converted to cash, used up, or sold within 1 year or less. Thus, on the classified balance sheet, current assets are listed first, based on their relative degrees of liquidity. Examples of current assets include supplies, insurance, and accounts receivable.

Investments may be either short- or long-term assets depending on the nature of the investments. Generally, bonds are considered long-term investments, whereas stocks may be either long-or short-term investments. Investments generally appear immediately following current assets on the classified balance sheet.

Property, plant and equipment are tangible, long-term assets; they are used in the continuing operations of the business and are expected to have useful lives of more than 1 year. They are also known as plant assets or fixed assets.

Intangible assets are usually long-term in nature and are traditionally shown on the classified balance sheet after plant assets. They lack physical substance and in some cases represent a right granted by a government (patent) or another company (franchise).

Classifying liabilities. Liabilities are classified in a similar manner. Liabilities are considered to be current liabilities if the obligation is to be settled within 1 year or within the current accounting period. These debts are usually settled with the payment of current assets. Examples of current liabilities are accounts payable, taxes payable, salaries payable, and notes payable.

Following current liabilities on the balance sheet are long-term liabilities, which are usually payable in more than a year. Examples of long-term liabilities include bonds payable and mortgages payable. In the year in which a long-term liabilities becomes payable, it is usually converted to a current liability.

 

Classified Balance Sheet

 

UISE ELIASON and COMPANY Balance Sheet December 31, 2XXX
ASSETS:
Current assets:
Cash…………………………………………………………………$
Accounts Receivable…………………………………………	251,000
Inventory ………………………………………………………..	298,900
Prepaid Expenses ……………………………………………	50,000
Total Current Assets……………………………………………………………	$ 6000,000
Long-Term Assets:
Land …………………………………………………………………$	$ 125,000
Plant and Equipment........................ $1,075,000
Less: Accumulated Depreciation………….. (283,200)
Plant and Equipment Net………………………………	791,800
Total Long Term Assets…………………………………………………………	916,800
Total Assets ………………………………………………………………………………..……….	$1,516,800
LIABILITIES:
Current Liabilities:
Accounts Payable…………………………………$ 501,000
Short-Term Note Payable………………………… 50,000
Total Current Liabilities …………………………………	$ 551,000
Long-Term Liabilities:
Bonds Payable………………………………………………………	300,000
Total Liabilities………………………………………………………………………………………	$ 851,000
STOCKHOLDERS’ EQUITY:
Common Stock, No Par Value,
10,000 Shares Issued and Outstanding…………………	$ 400,000
Retained Earnings …………………………………………………………	265,800
Total Stockholders’ Equity ……………………………………………………………………. Total Liabilities and Stockholders’ Equity……………………………………………....	665,800
$ 1,516,800

 

F. Translate the groups of derivatives:

a) account – accountant – accounting – accountancy – accountable – accountability

b) assist – assistance – assistant

c) calculate – calculated – calculation – calculator – calculating

d) earn – earner – earnings – earned

e) finance – financial – financing – financier

f) owe – owing – owing to – owed

g) own – owner – ownership – owning – owned

h) pay – payable – payee – payment – paid – unpaid

i) profit – nonprofit – not-for-profit – profitable – unprofitable – profitably – profitability – profiteer – profiteering – profitless

G. Match synonyms.

careful (accurate)	to perform (duties)
controller	commitments
executive	to aid
obligations	to supply
often	to bring adequate return
operations	to define
owners’ equity	to reduce
plant assets	to advance
sophisticated	transactions
to assist	administrative
to carry out	frequently
to cut down	fixed assets
to determine	difficult
to profit	chief accounting officer
to promote	to launch
to provide	net worth
to start	proper

H. Match antonyms.

bottom	profit
decreases	part-time
full-time	expenses
intangible	increases
long-term	to exceed
loss	to borrow
receivable	top
revenues	growth
to be salaried frequently	short-term
to decline	payable
to lack	tangible
to lend	to be paid a fee

 

 

Conduct some research into either the costs or the benefits of globalization. You should aim to give a presentation lasting approximately 15 minutes outlining your case. At the end of the presentation, you should be prepared to take 10 minutes of questions from your 'audience' on the issues you have raised in your presentation.

The 'opposition' will present their case in a similar manner. At the end of the exercise, you will be asked to write a short 500 word report on whether, and how, globalization should or can be 'managed'. The intention of the report is to get you to write a concise summary of the key issues facing the planet as globalization takes a further hold. You will be raising the key issues that face the authorities rather than providing any form of definitive answer. For example, you may feel that a key way of solving many of the problems is to further extend the movement towards freeing up trade. At this level, how that may be done is another matter!

Module 2 International trade

Starting up

 

v Think of some things you own (e.g. shoes, clothes, car and etc.). Which are imported? Where were they made?

v Try to recall the meals you’ve eaten in the last 24 hours. How much of the food came from abroad?

v What are your country’s major imports and exports?

v Do you think products made in your country are better than products made in other countries?

v Can you even imagine living in a country that did not import anything, where only locally produced food and textiles and products were available?

 

 

Reading: Protectionism and free trade

C. Read the text.

The majority of economists believe in the comparative cost principle, which proposes that all nations will raise their living standards and real income if they specialize in the production of those goods and services in which they have the highest relative productivity. Nations may have an absolute or a comparative advantage in producing goods or services because of factors of production (notably raw materials), climate, division of labour, economies of scale, and so forth.

This theory explains why there is international trade between North and South, e.g. semiconductors going from the USA to Brazil, and coffee going in the opposite direction. But it does not explain the fact that over 75% of the exports of the advanced industrial countries go to other similar advanced nations, with similar resources, wage rates, and levels of technology, education, and capital. It is more a historical accident than a result of natural resources that the US leads in building aircraft, semiconductors, computers and software, while Germany makes luxury automobiles, machine tools and cameras.

However the economists who recommend free trade do not face elections every four or five years. Democratic governments do, which often encourages them to impose tariffs and quotas in order to protect what they see as strategic industries – notably agriculture – without which the country would be in danger if there was a war, as well as other jobs. Abandoning all s