IV. Rearrange the following sentences to make a text.

1. It can be divided into two elements: verifiability and freedom from bias.

2. The latter suggests the information produced will not favour the interests of a particular group of users at the expense of another.

3. Apart from relevance objectivity is also important.

4. As a rule, accounting information should possess a number of qualities to be useful.

5. The most important quality is relevance.

6.The first suggests that the information produced can be independently observed or tested.

7. It suggests that accounting information should have the potential to influence the decisions and judgements of users.

V. Read the text again to answer the following questions:

1. What qualities should accounting information possess to meet the needs of users?

2. Why is relevance regarded as the primary quality of accounting information?

3. What two elements can objectivity be divided into?

4. What does verifiability suggest?

5.When do users have greater confidence in accounting information?

6. What does timeliness of accounting information suggest?

7. Why do users compare accounting information produced by different businesses?

8. What is meant by understandability?

The types and the titles of accounts

I. Practice in reading these words and word-combinations:

measurement, retrieval, to require, resemblance, thus, liabilities, equipment, a chart of accounts.

II. Read the text to find out what sort of accounts different companies have.

1. When large amounts of data are gathered in the measurement of business transactions, a method of storage and retrieval of information is required. In other words, there should be a filing system to sort out or classify all the transactions of a business. Only in this way can financial statements and other reports be prepared quickly and easily.

2. This filing system consists of accounts. An account is the basic storage unit for data in accounting. In its simplest form an account has three parts: a title that describes the asset, liability, or owner's equity account, a left side, which is called the debit side, and a right side, which is called the credit side. This form of the account, called a T account because of its resemblance to the letter 'T', is used to analyse transactions. It appears as follows:

Title of Account
Left or Debit Side	Right or Credit Side

Thus any entry made on the left side of the account is a debit, or debit entry, and any entry made on the right side of the account is a credit, or credit entry. The terms debit (abbreviated Dr, from the Latin debere) and credit (abbreviated Cr, from the Latin credere) are simply the accountant's words for left and right.

3. There are different types of accounts. The most commonly used ones are as follows: Asset Accounts, Liabilities Accounts and Owner's Equity Accounts. In a manual accounting system each account is kept on a separate page or card. These pages or cards are placed together in a book or a file. This book or file, which contains all groups of the company's accounts, is called a ledger. In a computer system, which most companies have today, the accounts are maintained on magnetic tapes or discs. However, as a matter of convenience, the accountant still refers to the group of company accounts as the ledger. To be able to find an account in the ledger easily and identify accounts when working with accounting records, accounts are numbered. A list of these accounts is usually called a chart of accounts.

4. Different companies have different charts of accounts. Every company develops a chart of accounts for its own needs. The specific accounts used by a company depend on the nature of the company’s business. A steel company will have many equipment and inventory accounts, whereas an advertising company may have few. Each company must design its accounts in a way that reflects the nature of the business and the needs of its management in directing that business.

Comments

retrieval of information – пошук інформації

a filing system – система реєстрації (підшивки) документів

to require – потребувати; required – потрібний, необхідний

a title – заголовок

a resemblance – подібність, схожість

Asset Accounts – рахунки активів

Liabilities Accounts – рахунки пасивів

Owner's Equity Accounts – рахунки власного капіталу

a chart of accounts – список (реєстр) рахунків

III. Re-read the text again to find out which of the following statements is correct.

1. As a rule, all the transactions of a business are sorted out and classified in a filing system consisting of accounts.

2. The basic storage unit for data in accounting is a financial statement.

3. The right side of an account is called the credit side.

4. The simplest form of an account has 4 parts.

5. Any entry made on the left side is called a credit.

6. A book or a file containing all or some groups of accounts is called a ledger.

7. As a matter of fact, accounts used by a company never depend on the nature of the company's business.

8. Accounts are always numbered and that makes it possible to find an account in the ledger easily.

IV. Re-read the text to find out which of its paragraphs deals with:

1. the form and structure of an account;

2. different types of accounts;

3. the organisation of accounts in a ledger;

4. different charts of accounts in different companies.