Prepare a short talk on the following.

1. What financial ratios are taken into account by managers to enable them to conduct their business effectively?

2. Financial analysis is the use of financial data to evaluate the financial position of a firm. How does it work in practice?

3. What questions do financial managers face daily?

4. Imagine that you are a financial manager. Describe you duties. Is it difficult for you?

 

 

Unit 19

 

 

accounting бухгалтерський облік

capture отримання

book-keeping рахівництво

record запис

balance sheet балансовий звіт

income statement звіт про прибутки та збитки

profit and loss account рахунок прибутків та збитків

double-entry bookkeeping бухгалтерський облік по методу подвійного запису

cash basis метод запису прибутків та збитків на рахунках тільки при їх надходженні та сплаті

accrual basis метод нарахування при обліку прибутків та збитків на рахунках; запис прибутків та збитків у момент завершення операції

debit side ліва сторона балансу

credit side права сторона балансу

communication передача (інформації)

processing опрацювання

 

Read sentences only with new lexis and translate them.

1. The objective of financial statements is to provide useful information for users.

2. Accounting is used to describe the transactions entered into by all kinds of organizations.

3. Ukrainian companies report the full cost of goods sold, which includes production costs, transportation, depreciation, marketing and financial expenses.

4. Fixed assets posed the most serious problem.

5. Accounting can be divided into three phases: capture, processing and communication of financial information.

6. Accounting can show the managers or owners of a business whether or not the business is operating at a profit.

7. Accounting is based on the accounting equation.

8. Changes in the balance sheet are made according to the principle of double-entry bookkeeping.

 

Put the missing letters.

Ac..unting, c..sh b..s..s, a…rual b..s..s, d..bit s..de, b..l..nce sh..t, b…k-k…ping, c..pt..re, pr..ces..ing, cr..d..t s..de, d..ble-..ntry b..k-k..ping.

 

Read the text.

ACCOUNTING PRINCIPLES AND CONCEPTS

The accounting system in any given country is one of the key elements of the economic system. It is determined to a significant extent¹ by the level and direction of the economic system's development.

The most important theoretical concept of the Anglo-American accounting may be summed up as follows: the subject of accounting is the calculation of the financial results of an economic entity's business activity.

Accounting is used to describe the transactions entered into by all kinds of organizations.

Accounting can be divided into three phases: capture, processing and communication of financial information.

The first phase, the process of capturing financial information and recording it, is called book-keeping. Accounting, in the true sense of the word,² extends far beyond the actual making of records. It includes their analysis and interpretation, it shows the relationship between the financial results and events which have created them.

Accounting can show the managers or owners of a business whether or not the business is operating at a profit, whether or not the business will be able to meet its commitments³ as they fall due.⁴

Accounting is based on the accounting equation, which states that a firm's assets must equal its liabilities plus its owners' equity⁵.

Assets and liabilities, profits or losses are listed in financial statements. The two main types of financial statements are the balance sheet and the income statement (profit and loss account).

The balance sheet lists a firm's assets, liabilities and owner's equity at a point of time.⁷

Changes in the balance sheet are made according to the principle of double-entry bookkeeping. This principle made its appearance in the 13th century in Northern Italy. It was improved and disseminated at the end of the 14th century by the work of Luca Pacioli, a monk and a university teacher. This principle states that each transaction must be recorded on the balance sheet as two separate entries so that the accounting equation will hold at all times,⁸ the totals of each side will always equal one another, and that this will always be true no matter how many transactions are entered into.

Balance sheets are drawn up periodically: monthly, quarterly, half-yearly, annually.

There is an account for every asset, every liability and capital. Accounts can be prepared either on a cash or accrual basis. Each account should be shown on a separate page.

The double entry system divides each page into two halves. The left-hand side is called the debit side, while the right-hand side is called the credit side.

The balance sheet shows a lot of useful financial information, but it does not show everything. A firm's sales, costs, and profits for a given period are shown in an income statement.

 

Words you need:

to a significant extent¹ у значній мірі

in the true sense of the word² у повному розумінні слова

to meet one’s commitments³ виконувати зобов’язання

to fall due⁴ підлягати оплаті, виконуванню

owners' equity⁵ власний капітал компанії

at a point of time⁷ у певний період часу

will hold at all times⁸ залишається завжди справедливим

 

Exercises

Answer the questions.

1. What role does an accounting system play in an economy?

2. Into what phases is accounting broken down?

3. What is accounting equation?

4. What is the most widely practiced principle of bookkeeping?

5. What does the balance sheet list?

6. What is shown in the income statement?

 

2. Find in the text English equivalents for the following Ukrainian phrases:

Ключовий елемент економічної діяльності; фінансові результати господарчої діяльності суб’єкта, який господарює; угоди, в які вступають різні організації; отримання, опрацювання та передача інформації; відображення інформації у фінансовій звітності; працювати з прибутком; виконувати

свої зобов’язання; бухгалтерське рівняння; активи повинні бути рівними пасивам; у балансі відображаються; облік по принципу подвійного запису; відображати у балансі, складати баланс; рахунок прибутків та збитків.

 

3. Think of the English synonyms to these Ukrainian verbs: относить (на), отражать (в учете), учитывать.