Open the brackets using the verbs in appropriate form.

1. Equity would decrease if the owners (to withdraw) funds from the business.

2. If there (to be) a change in the amount for one item in a balance sheet, it will be always accompanied by an equal change in some other item.

3. If cash is received from the issuance of bonds, this figures (not to be shown) in the income statement.

4. The same amount of depreciation would be evaluated each year if the accountant (to choose) the straight-line method.

5. If the company {to choose) proper ways to use its assets for producing goods and rendering services, it would have earned enough revenue to stay in business.

6. If a customer received commodities or promised to pay the company in the future, the revenue (to be recorded) in accounts receivable.

7. If cash (to be paid) to purchase equipment, this figure will be added to the asset account of a plant.

If the company (to introduce) a new product, it would have increased the company's future cash flows.

 

16. Prepare a short talk on the following:

1. What sort of statement the balance sheet is.

2. What sort of statement the income statement is.

3. The difference between the two branches of accounting.

4. Accounting principles.

 

 

Unit 20

 

receipt грошові надходження; прибуток

journal бухгалтерський журнал, відомість

ledger бухгалтерська книга

posting перенесення у бухгалтерську книгу

to draw up складати

trial balance попередній бухгалтерський баланс

to bring accounts to balance складати зведений баланс (сводный)

favourable balance активній баланс

balance on an account залишок рахунку

balance in hand грошова готівка

balance with foreign banks залишки на рахунках у закордонних банках

error помилка

preliminary попередній

 

Read sentences only with new lexis and translate them.

1. The balance sheet cannot be completed until the depreciation of the capital assets is calculated.

2. For management of any company to be efficient, extensive and accurate information concerning receipts and payments, assets and liabilities, depre­ciation of assets and other data about company status are required.

3. The bank won't make a loan to any company until its experts study thoroughly the company's balance sheet.

4. In the second step in the accounting cycle, the amounts from the various journals are usually monthly transferred to the company's general ledger - a procedure called posting.

5. A new product is unlikely to be sold successfully until a wide advertis­ing campaign is organized professionally.

6. The demand for high-quality goods remains low until the consumers' incomes rise.

7. This procedure known as the drawing up of a trial balance and those that follow it usually take place at the end of the fiscal year.

8. Until a country's imports exceed its exports, there is a deficit in the trade balance.

 

Put the missing letters.

r..c…pts, j…rnal, l..d..er, p..st..ng, dr..w up, tr…l bal..nce, b..l..nce of tr..de, b..l..nce in h..nd, b..l..nce with f..re…n b..nks, fav..rable b..l..nce.

 

Read the text.

Bookkeeping as Part of Accounting Cycle

For management of any company to be efficient, extensive and accurate information concerning receipts and payments, assets and liabilities, depre­ciation of assets and other data about company status are required. Such information being obtained mainly from different records, additional funds and time should be invested in bookkeeping and accounting system.

In general, accounting and bookkeeping mean identifying, measuring, recording economic information about any business, bookkeeping being con­sidered the preliminary stage and part of the larger field of accounting.

The task of a bookkeeper is to ensure the record-keeping aspect of ac­counting and therefore to provide the data to which accounting principles are applied in the preparation of financial statements. Bookkeeping provides the basic accounting data by systematical recording such day-to-day financial information as income from the sale of products or services, expenses of busi­ness operations such as the cost of the goods sold and overhead expenses¹ such as a rent, wages, salaries.

Accounting principles determine which financial events and transactions should be recorded in the bookkeeper's books. The analysis and interpretation of these records is the primary function of accounting. The various financial statements produced by accountants then provide managers with the basis for future financial planning and control, and provide other interested parties (in­vestors, the government) with useful information about the company.

Modern accounting system is considered to be a seven-step cycle. The first three steps fall under the bookkeeping function, such as: 1) the systemat­ic recording of financial transactions; 2) the transferring of the amounts from various journals to general ledger (also called "posting step"); 3) the drawing up of the trial balance.

Record keeping of companies is based on a double-entry system, due to which each transaction is recorded on the basis of its dual impact² on the company's financial position. To make a complete bookkeeping record of every transaction in a journal, one should consider interrelated aspects³ of every transaction, and entries must be made in different accounts to keep the ins (receipts) and outs (payments) balanced.

A typical account is known to have two sides: the items on the left side are called debits, while the items on the right side are credits.

Thus, double-entry bookkeeping doesn't mean that the same transaction is entered twice, it means that the same amount of money is always debited to one account and credited to another account, each record having its own effect on the whole financial structure of the company. Certain accounts are increased with debits and decreased with credits, while other accounts are increased with credits and decreased with debits.

In the second step in the accounting cycle, the amounts from the various journals are usually monthly transferred to the company's general ledger - a procedure called posting. Posting data to the ledgers is followed by listing the balances of all the accounts and calculating whether the sum of all the debit balances agrees with the sum of all the credit balances. This procedure known as the drawing up of a trial balance and those that follow it usually take place at the end of the fiscal year. By making a trial balance, the record-keeping accuracy can be checked. The trial balance having been successfully prepared, the bookkeeping portion of the accounting cycle is completed.

The double-entry system of bookkeeping enables every company to deter­mine at any time the value of each item that is owned, how much of this value belongs to creditors, the total profit and how much belongs to the business clear of debt. Thus, one advantage of the double-entry system is that its infor­mation is complete enough to be used as the basis for making business deci­sions. Another advantage is that errors are readily detected, since the system is based on equations that must always be in balance.

 

Words you need:

overhead expenses¹ накладні витрати

dual impact² подвійний вплив

interrelated aspects³ взаємопов’язані аспекти

Exercises

Answer the questions.

1. What kind of information is of great importance for proper company management?

2. What role does bookkeeping play in the accounting cycle?

3. What kind of data is collected by a bookkeeper?

4. What is the difference between bookkeeping and accounting?

5. Who is interested in obtaining accurate accounting information?

6. What is the modern concept of the accounting system?

7. What tasks should a bookkeeper solve at the first three steps of the accounting cycle?

8. What does double-entry bookkeeping mean?

9. What data are recorded in the company's general ledger?

10.When is the bookkeeping cycle considered to be completed?

11.What are the advantages of the double-entry system?

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

Для того, щоб керування компанією було ефективним; така інформація, яка отримана; бухгалтерський облік розглядається, як; забезпечити ведення обліку; повсякденна фінансова інформація; принципи фінансового обліку визначають; первинна функція обліку; забезпечують менеджерів; розглядається як система із семи кроків; ведення обліку засновується на системі бухгалтерського обліку з подвійним записом; для того щоб зробити повний бухгалтерський запис; записується двічі; визначені рахунки зростають з дебітом; загальна бухгалтерська книга; запис даних у головну бухгалтерську книгу; складення попереднього балансу.

3. Find in the text nouns that are most often used with the following verbs and adjectives:

To record, to prepare, to pay, to receive, profitable, to disagree, to decide, to determine, to equal, to inform, to invest, to manage, to balance, to interpret, valuable, to analyze, to post, accurate.