I. Match the words in the box with the definitions below. Look at A and B opposite to help you.

credit ledger debit

creditors stock debtors

1. an amount entered on the left-hand side of an account, recording money paid out

2. a book of accounts

3. customers who owe money for goods or services not yet paid for

4. an amount entered on the right-hand side of an account, recording a payment received

5. goods stored ready for sale

6. suppliers who are owed money for purchases not yet paid for

 

II. Complete the sentences using “debit” or “credit”. Look at A opposite to help you.

1. If you buy new assets, you ….. the cash or capital account.

2. If you pay some bills, you ….. the liabilities account.

3.If you buy materials from a supplier on 60 days’ credit, you ….. the purchases account and ….. the supplier’s account.

4.If you sell something to a customer who will pay 30 days later, you ….. the sales account and ….. the customer’s account.

Unit 5.

 

 

FINANCING

Key Words and Phrases:

1. to pay the bills – сплачувати рахунки 2. promotional campaign – рекламна компанія 3. to pay salary – сплачувати заробітну платню 4. employee – службовець, найманий робітник 5. emergency – непередбачений випадок, крайня необхідність

6. expansion – розширення, зростання 7. sales revenue – прибуток від продажу 8. equity capital – акціонерний капітал 9. debt capital – борговий капітал 10. proceeds – надходження, прибуток

Read and translate the text:

 

Without financing there would be very little business. Financing gets a business started, supports the firm’s production and marketing activities, pays its bills and, when carefully managed, produces a reasonable profit.

Short-term financing is money that will be used for one year or less. A firm might need short-term financing to pay for a new promotional campaign, to pay salaries to its employees or it may spend these funds for emergencies.

Long-term financing is money that will be used longer than one year. Such financing may be required for starting a business, expansion, new-product development and marketing, replacement of production facilities.

Short-term financing is usually easier to obtain than long-term financing.

The four principal sources of financing are sales revenue, equity capital, debt capital, and proceeds from the sale of assets.

 

Exercises in Reading and Comprehension.

Match Column I with Column II to make up pairs of synonyms.

Column I Column II

1. bill a. gain

2. pay the bills b. pay

3. profit c. enlargement

4. salary d. substitute

5. expansion e. get

6. replacement f. proceeds

7. obtain g. loan capital

8. revenue h. set up a business

9. debt capital i. settle the bills

10. start a business j. invoice

II. Fill in the blanks with the proper words or phrases from the text.

1. European sales account for 30 % of the company’s ….

2. … is the part of a company’s money owned by shareholders.

3. … is the part of a company’s money that is borrowed and has to be repaid.

4. She used the … from the sale of her old house to buy a new one.

5. Call the police; this is an ….

6. The … of computers is a complex assembly process.

7. That company pays its … every two weeks.

8. My … has increased 5% this year.

9. The company has already paid for a new … campaign.

10. … financing is money that will be used for one year or less.

 

1. Short-term 6. promotional

2. salary 7. employees

3. production 8. emergency

4. proceeds 9. Debt capital

5. Equity capital 10. revenue

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Unit 6.

 

FINANCIAL INSTITUTIONS IN THE U. S. A.

Key Words and Phrases:

1. to deal (v) – діяти, мати справу 2. financial institutions – фінансові організації 3. to save (v) – рятувати, зберігати 4. to loan (v) – позичати 5. mutual (adj) – спільний 6. profit (n) – прибуток 7. to offer (v) – пропонувати 8. to check (v) – перевіряти 9. account (n) – рахунок 10. to insure (v) – страхувати 11. to pledge (v) – давати під заставу

12. collateral (n) – додаткове забезпечення 13. secure (adj) – гарантійний, надійний 14. prime (adj) – перший, передовий, кращий, базовий 15. rate (n) – ставка, тариф, коефіцієнт, степінь, такса 16. customer (n) – клієнт, покупець 17. to charge (v) – назначати, встановлювати (плату) 18. free (adj) – вільний, безплатний 19. to assess (v) – оподатковувати 20. fee (n) – винагорода

Read and translate the text:

Businesses that distribute or deal in money are called financial institutions. New institutions that meet new financial needs are appearing almost every day in the USA. The most familiar institutions are commercial banks, savings banks, savings and loan associations, mutual savings banks, credit unions, investment banks and so on.

A commercial bank is a privately owned profit-making corporation. It serves both individuals and businesses by offering checking and savings accounts, loans, and credit cards. It also deals in some brokerage, insurance, and financial advise.

The commercial bank is the most important source of short term loans for businesses. Sometimes the borrowers pledge collateral to back up the loan. Such loan is a secured loan. Companies with a good financial position are given the prime rate of interest which is the lowest commercial interest rate.

The commercial bank offers its customers accounts of two types: demand deposits and time deposits. A demand deposit makes the money in it available to depositors immediately, while a time deposit requires depositors to leave their money with the bank for a stated period of time.

Most banks offer their customers various savings certificates, called certificates of deposit. Savers may put their money into thirty day, six month, or two and a half year certificates. The highest interest is paid to the customers who deposit their money for a longer period.

Banking services are not free and banks charge fees for them. Many banks assess a service fee if an account balance falls beneath a particular minimum, such as $200.

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There are two types of commercial banks. A national bank is chartered by the federal government. About one third of all commercial banks are national. A stare bank, which is smaller than a national bank, is chartered by an individual state.

Answer the following questions:

1. What are the businesses called that distribute or deal in money?

2. What are the most familiar financial institutions in the USA?

3. Who owns a commercial bank?

4. What services does a commercial bank offer to its customers?

5. What do the customers do sometimes to back up the loan?

6. What kind of an interest rate do commercial banks give to customers?

 

Read the dialogue.

Words and Expressions:

1. as a matter of fact – фактично 2. sure – тут: звичайно 3. of your own – ваші власні 4. short lived – недовго живучий 5. not necessary – не обов’язково 6. just as well – також

7. at least – по крайній мірі 8. suppose (I suppose) – я думаю 9. either - також 10. don’t worry – не хвилюйтесь 11.soon – скоро 12. to call in – заходити, забігати 13. if you don’t mind – якщо ви не проти

Jack Morton is consulting his financial adviser:

Jack As a matter of fact, I’m thinking of starting an automobile agency. Could you tell me how I should finance this business?

Adv Sure, Jack. If you’ve got some money of your own, you can operate on a cash basis: no credit given, no money borrowed. But a firm of this kind is usually a short lived one.

Jack Shall I get credit from the bank then?

Adv Not necessary. You may just as well go to any insurance company and they will be only glad to help you, or at least they will try to show it.

Jack Suppose I get their money to construct a building. But I’ll need a lot more money to pay for the tools and equipment.

Adv Oh, that’s not a problem either. The car manufactures will pay for it on a credit basis. And of course, you will get a loan from the bank to pay other expenses.

Jack But that will mean a lot of money! How shall I pay it back?

Adv Don’t worry! The more money you invest the more rapid the progress you will make. You will certainly have idle money very soon. But do not let it stay idle, invest and get profit out of it.

Jack O.K. Thanks for the advice. I’ll call in later for more details, if you don’t mind.

Adv Of course I don’t. I’ll be glad to see you any time of the day.

 

 

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Unit 7.

HOW DO BANKS WORK?

Key Words and Phrases:

1. loan – позика 2. mortgage – застава 3. interest – відсоток 4. commercial bank - комерційний банк 5. national bank – національний банк 6. to charter – створювати

7. to supervise – контролювати 8. state bank – державний банк 9. merchandise – товари 10. currency – валюта, гроші 11. foreign exchange department – відділ обміну валюти 12. to exchange currency – обмінювати валюту

Read and translate the text:

 

Essentially, banks and other financial institutions such as trust companies and credit unions provide:

1. a safe place to keep your money;

2. services helping you to manage your money;

3. loans and mortgages.

It is important to realize that financial institutions do not just hold your money in a safe place. They make money by:

1. investing your money, for which they pay you interest;

2. lending you money, for which they charge you interest;

3. providing you with credit, usually in the form of a credit card.

The interest rate on credit cards on your unpaid balance is quite a lot higher than on a conventional loan.

 

Banks are different in different countries. Let’s speak about the banks in the United States of America. There, commercial banks are classified into two main groups. First, there are national banks. They are chartered and supervised by the Federal Government. Secondly, there are state banks. They are chartered and supervised by the state in which they are operated. All commercial banks can make loans to borrowers.

Major commercial banks in such cities as Tokyo, Paris, Rio cooperate with each other. In this way they finance import and export between countries.

An importer buys merchandise from another country using the currency of that country. For that purpose he buys this currency from the foreign exchange department of his bank. And in the same way if an exporter receives foreign money from sales to other countries, he sells this currency to his bank. By this method the currency of any country can usually be exchanged.

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Exercises in Reading and Comprehension.

Comprehension Questions

1. What do all commercial banks do?

2. What kinds of commercial banks in the USA do you know? What are they called?

3. Who supervises the operations of national banks?

4. What kind of currency does an importer generally use when he buys goods from another country?

5. What do you know about the “international exchange”?

6. What is the currency of this country called?

7. What is the exchange rate between your currency and the currency of the USA and Germany? How can you find it out if you don’t know it?

Vocabulary Practice

Choose the necessary word and put it in the sentence.