Modul 3: Production possibilities

Passive Voice

Unit 21

Fundamentals of bookkeeping

A definition of bookkeeping could be: the monitoring, recording and tracking of all financial transactions performed and done by a company. The term “company” encompasses large corporations, medium scale business, small scale business and home businesses. A side of this is accounting bookeeping which is essentially the combination of accounting and bookeeping in one department.

Setting up a bookkeeping business has become a financially rewarding options, due to recent growth in small to medium businesses requiring bookeeping services. This will be discussed in greater depth in the future on this site.

It is important for a business owner to have an understanding of the basics of bookkeeping. The idea of bookkeeping is that the bookkeepers keep records of what the company sold, bought, owed, and owned. Bookkeeping also allows owners to keep track of their financial inventories, and to determine their company’s financial standing.

A business owner should be aware of the aim of bookkeeping. Bookkeeping shares two basic goals. Firstly, it keeps track of the business income and expenses. Keeping track of these financial transactions enables the business owner to improve his chances of making a profit, and in turn reduce the chances of losses.

Secondly, and equally as important, bookkeeping aims to collect financial information that is needed for filing the business’s tax returns.

The basics of bookkeeping may sound simple enough- balancing what you earn off against what you pay. Given the right tools and knowledge, it can be very simple, especially with recent developments in bookkeeping software programs. All that is needed is for the owner and the bookkeeper to remind themselves of those two goals.

In terms of storing and monitoring the records, there are no specific ways to do it. As long as the records of the business’s income and expenses are accurate and clean, the business won’t have a problem. The Internal Revenue Service/ Taxation Department will find them acceptable.

The basics of bookkeeping also involve the actual process of keeping the books clear and easy to understand. This process of organization is broken down in to 3 simple steps.

Firstly, the business owner or bookkeeper must keep ALL the receipts and other acceptable financial records such as deposit slips for all expenditures of the business. At this juncture it is advisable to use a company credit card for the majority of expenses, so that the statement can clearly be used for the majority of expenses. This negates the need to keep all receipts when the credit card is being used for purchases for the business.

Secondly, the business’s income and expenditure records should be summarized in a periodic basis, whether daily, weekly or monthly.

Thirdly, those summaries will be used to formulate financial reports that will state how much profit the business is making and how much is it losing. The financial report will also display what the business is worth at any specific time.

No matter what method of bookkeping you wish to maintain- via hand or http://www.book-keeping-tips.com/Bookkeeping_Software_Basics.html bookkeping software, the basics and fundamentals of bookkeping are still the same. The crucial element of bookkeeping is to start early and never let it get on top of you- that way it will always be easily managed.

 

Grammar: MODAL VERBS

We use can to say that something is possible or that somebody has the ability to do something.

We can see the lake from our window.

To be able is possible instead of can, but can is more usual.

Are you able to speak English?

Could is the past of can.

I could speak English when I was 5.

If we are talking about what happened in a particular situation, we use was/were able to…or managed to…

The fire spread through the window but everybody was able to escape/or everybody managed to escape.

 

Exercises

Complete the sentences with can/can’t/could /couldn’t + one of these words.

Come eat hear run sleep wait

1. I’m afraid I…………..to your party next week.

2. When Tim was 16, he was a fast runner. He…………100 metres in 11 second.

3. Are you in a hurry? No, I have got a plenty of time. I………………..

4. I was feeling sick yesterday. I……………anything.

5. Can you speak up up a bit? I……………..very well.

6. You look tired. Yes, I……………….last time.

 

Complete the sentences with using could, couldn’t, was/were able to.

1. My grandfather was a very clever man. He……….speak five languages.

2. I looked everywhere for the book but I ……………find it.

3. They didn’t want to come with us at first but we………… persuade them.

4. Laura had hurt her leg and……………walk very well.

5. Sue wasn’t at home when I phoned but I………..contact her at her office.

6. I looked very carefully and I……..see a figure in the distance.

7. I wanted to buy some tomatoes. The first shop I went to didn’t have any but I…………..get some in the next shop.

8. My grandmother loved music. She…………play the piano very well.

9. A girl fell into the river but fortunately we……….rescue her.

10. I had forgotten to bring my camera so I……….take any photographs.

 

 

Unit 22

Before you read

Discuss these questions with your partner

Inflation is the rising cost in prices over time.

-Does your country suffer from inflation?

-Why do you think this is?

 

A Vocabulary

Choose the correct word.

1. When something is in the headlines/articles it is an important story in the news.

2. When parents are unemployed it is difficult for a family to make ends touch/meet.

3. The cost/price of living in cities like London and Tokyo is very high.

4. People prefer to shop in supermarkets because they find a wide range/amount of goods there.

5. The retail/shopping industry includes shops, supermarkets and department stores.

6. In statistics, when a number is valued/weighted it is multiplied by another number to show its importance.

7. The victim/culprit is the person or thing that is responsible for doing something bad.

8. It is difficult for old people to manage/cope with living on a small pension.

9. In maths, a/an equation/formula is a sum which is equal on both sides.

10. The speed that something travels at is called velocity/capacity.

 

Reading 1

Inflation

Inflation is an overall increase in prices over a certain period of time. It's also a worry for anybody who is trying to make ends meet, and a headache for many governments. The rate of inflation is often in the headlines. However, inflation isn’t really news. In most of Europe, for example, prices have risen year after year for at least the last 50 years. Deflation (overall decrease in prices) does happen occasionally, but the trend is mostly for the cost of living to increase.

There are lots of ways to measure inflation. One of the most popular ways is the retail price index. This is calculated by recording increases in price for a range of goods and services. This is sometimes called a basket of goods. Some of the goods are weighted more heavily than others because they are more important. For example, food will be weighted more than the cost of a cinema ticket, because a 5% increase in food is more important than a 10% increase in the cost of seeing a film. Inflation is worked out from an average of all the price increases in the basket.

Inflation can happen for a number of reasons, but economists say there are two main culprits. There are demand-pull inflation and cost-push inflation. Demand-pull inflation can happen when the economy is growing fast. Aggregate demand begins to grow faster than suppliers can cope with. This causes a shortage, and prices rise. At first, customers may be able to pay the higher prices, and demand grows again. This forces prices up even more, and the cycle continues.

One of the characteristics of demand-pull inflation is that there is often too much money going round the economy. This is explained by the quantity theory of money. This theory uses the following equation:

Money supply * velocity = average price * transactions.

Velocity is the speed that money is passed on from one person to another. Some economists say that velocity and the number of transactions don’t really change. The only things that change in this equation are the money supply and average prices. This means that when the money supply increases, prices will increase too. For this reason, printing money is rarely a solution for economic crises.

Cost-push inflation, on the other hand, occurs when prices rise without an increase in demand. This happens when suppliers' variable costs increase sharply. For example, workers may demand higher wages or raw materials may become more expensive. Producers then pass these increases on to consumers by raising prices. So, as usual, we are the ones who pay!

 

B Comprehension

Now read the text again and match each paragraph with the correct heading.

PARAGRAPH 1 …………………….

PARAGRAPH 2 …………………….

PARAGRAPH 3 …………………….

PARAGRAPH 4 …………………….

PARAGRAPH 5 …………………….

A. Measuring inflation.

B. Too much cash.

C. The effects of aggregate demand and inflation.

D. Production cost changes.

E. Inflation is a fact of life.

 

Before you listen

Discuss the following with your partner.

-High inflation affects the whole economy in different ways. How do you think inflation affects the people and organizations listed below? Try to match the people and organizations 1-4 with the effects A-D.

1. people on a fixed income A. lose money on loans

2. banks B. cant get investment

3. businesses C. are not so competitive

4. exporters D. cant buy as much with their money

 

C Listening

Now listen and check your answers