Accounting

Accounting shows a financial picture of the firm. An accounting department records and measures the activity of a business. It reports on the effects of the transactions on the firms financial condition. Accounting records give very important data. It is used by management, stockholders, creditors, independent analysts, banks and government.
Most businesses prepare regularly the two types of records. That is the income statement and balance sheet. These statements show how money was received and spent by the company.
One major tool for the analysis of accounting records is ratio analysis. A ratio analysis is the relationship of two figures. In finance we operate with three main categories of ratios. Оne ratio deals with profitability, for example, the Return on Investment Ratio. It is used as a measure of a firms operating efficiency.
The second set of ratios deals with assets and liabilities. It helps a company to evaluate its current financial position. The third set of ratios deals with the overall financial structure of the company. It analyses the value of the ownership of the firm.
Active Vocabulary
accounting бухгалтерський облік
record документ, нотатка, протокол
to record нотувати, реєструвати
to measure вимірювати
transaction угода, банківська операція
firm's financial condition фінансовий стан фірми
to provide data надавати дані
creditor кредитор
independent незалежний
income statement звіт про прибутки
balance sheet балансовий звіт
to receive отримувати
to spend витрачати
ratio analysis аналіз коефіцієнтів
profitability прибутковість
Return on Investment Ratio коефіцієнт повернення інвестицій
efficiency ефективність, продуктивність
to evaluate оцінювати
value цінність, вартість
ownership власність
overall financial structure повна фінансова структура
Comprehension Questions
1. What is the purpose of accounting?
2. Who uses the data provided by accounting firms?
3. What are the two types of records which most businesses prepare?
4. What can you know analyzing the income statement and balance sheet of a company?
5. What is the purpose of the ratio analysis?
6. What categories of ratios in finance do you know?
Vocabulary Practice
Exercise 1. Choose the necessary word and put it in the sentence.
1. An accounting helps... the activity of a business. 1 to profit
2. Do you know the effect of your last...on financial condition
of the firm? 2 profit
3. Accounting records provide ... for stock-holders,
independent analysts. 3 efficiency
4. The second type of ratio helps the company ... its current
financial position. 4 ownership
5.... is one the two main records which most of the businesses
prepare regularly. 5 to evaluate
6. The ... of the company includes real estate in California. 6 transaction
7.1 am sure of the ... of this transaction. 7 data
8. Our company's current... is very high. 8 income statement
9. They ... from the association with that corporation. 9 to measure
Dialogue
(Peter and Karen work in a large company. They are having dinner in the company cafe).
Peter Hi, Karen. Glad to meet you. You looked very busy this morning. There were
so many statements on your table.
Karen Oh, Peter. This is the end of the year. The accounting department is very busy.
Peter I know. We are all very busy, totaling accounts. But I've already turned in the
report on my department.
Karen Good.
Peter So, how's business.
Karen I don't know everything. I am busy with some records and statements. I don't
have the whole picture. But I think the company is doing very well.
Peter I am sure of it. We have to keep our creditors and investors happy.
Karen Well, the balance sheet and profit and loss statement are ready. It is the end
of the fiscal year. So everybody can check out the assets and liabilities, net
worth and profit position of the company in the financial statements.
Peter Do you work with the pay checks?
Karen Why are you asking?
Peter I thought you could explain me the big difference between my gross pay and
my net take-home pay.
Karen The explanation takes only one word - taxes. Actually the salaries are done
through the computer.
Peter Really?
Karen Sure, We can't handle any volume in a large company without computers.
Peter You are right. Thank you for very interesting information.
Karen Oh, its my pleasure. Let' s go to get some dessert.
Active Vocabulary
accounting department бухгалтерський відділ
to total accounts підсумовувати рахунки
to turn in the report здавати звіт
creditor кредитор
investor інвестор
profit and loss statement звіт по прибутках і збитках
assets and liabilities актив і пасив
net worth а) вартість майна без врахування зобов'язань
б) власний капітал підприємства
a financial statement фінансовий звіт
a pay check - платіжний чек
gross - валовий, брутто
gross pay - плата з вирахуваннями
net - чистий, нетто
net pay - плата без вирахувань
tax - податок
salary - зарплатня
fiscal year - фіскальний (бюджетний) рік
Vocabulary Exercises
Exercise 1. Have a look at the structure.
Can you turn in the report in time?
No, I can’t turn in the report but I could when I worked in the other department.
1. Can they check the assets and liabilities?
2. Can you keep the investors and creditors happy?
3. Can you explain the difference between gross pay and net take-home pay?
4. Can he compute the taxes?
5. Can we prepare profit and loss statement?
6. Can the company pay the salaries in time?
7. Can I operate the computer?
Exercise 2. Imagine that you work as an accountant in a big enterprise. Answer the following questions.
1. Do you total the accounts at the end of the fiscal year?
2. What are your usual activities at the end of the fiscal year?
3. When do you prepare a financial statement?
4. Why should you have more assets than liabilities?
5. Does the accounting department work on taxes?
6. What is the difference between your gross salary and net salary?
7. Is the difference between gross salary and net salary big in this country? What does this difference depend on?
Exercise 3. Make up the dialogue about accounting:
a) between an experienced accountant and a university graduate who has just begun to work as an accountant;
b) you are an employer and you want to hire an accountant, find out, if he (she) is experienced enough in accounting.
Exercise 4. Translate from Ukrainian into English.
1. Бухгалтерський облік надає дані кредиторам і тим, хто вкладає гроші.
2. Вони готують звіт про прибутки та фінансовий звіт наприкінці фінансового року.
3. Ми визначаємо ефективність виробництва за допомогою аналізу коефіцієнтів.
4. Нерухомість є власністю корпорацій.
5. Ми перевіримо актив і пасив, визначимо вартість майна без урахування зобов'язань.
6. Ми сплачуємо великі податки.
7. Скільки ти отримуєш без вирахувань?
Grammar Exercises
Exercise 1. Make the sentences negative.
Model: I worked as an accountant in a big corporation.
I didn't work as an accountant in a big corporation.
1. An accounting department reported on the effects of the transactions.
2. They studied carefully income statement and balance sheet.
3. We used ratio analysis to determine the firms operating efficiency.
4. The accountants checked the assets and liabilities.
5. The accounting department provided data for the management.
Exercise 2. Put up for questions of different types to each sentence (general, special, disjunctive, alternative).
Model: The accounting department regularly prepared the income statement and
balance sheet.
1. Did the accounting department regularly prepare the income statement and balance sheet?
2. What did the accounting department regularly prepare?
3. The accounting department regularly prepared the income statement and balance sheet, didn't it?
4. Did the accounting department prepare the income statement or a financial statement?
1. The board of directors checked out assets, liabilities and net worth.
2. He worked as a Comptroller of the company for two years.
3. The applicants sent their resumes and letters of interest.
4. She used to do books in a big company.
5. Some governmental corporations issued stock certificate.

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