III. Rearrange the following sentences to make a text.

1. Many years have passed since those days. Businesses have become much larger today.

2. They say it takes its name from a Saxon word meaning "the one that lies" on a merchant's counter.

3. In the earliest days of accounting the ledger lay on the ledge, usually under a window where the light was good.

4. All records in accounting are kept in a book called a ledger.

5. It is not convenient to keep the ledger as a bound book. Instead, computer records, card indexes and loose-leaf books are being used.

6. Each page in the ledger was called an account. Each account had the name of the person, or goods, or any other thing which was being accounted for.

IV. Use the information from the text to complete the sentences.

1. A ledger is simply a _____ of _____ arranged in some systematic manner.

2. Transactions are first recorded in the ____ and later transcribed into the individual accounts which constitute the____.

3. The process of copying amounts from the journal to the ledger accounts is known as____.

4. The journal provides a complete record of transactions in ____ order.

5. Both the ____ and ____ are recorded on the same page; the whole story of a particular transaction is apparent at one glance.

6. If ____ wants to know how much cash the company has at a particular time, it will seek the answer in the ledger rather than in the journal.

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

1. What can you say about the origin of the word “ledger”?

2. What was the ledge?

3. Does the journal replace the account?

4. How to name the process of copying amounts from the journal to the ledger accounts?

5. Should the bookkeeper be interrupted while posting, he could not tell where he was when he left off, could he?

6. Does the ledger or the journal provide a complete record of transactions in chronological order?

7. In what book may the accountant find a complete record of the transaction?

8. What book contains only half the story of a particular transaction in a separate account?

9. If management wants to know how much cash the company has at a particular time, where will it seek the answer?

10. Both the journal and the ledger serve unique purposes, don’t they?

Accountancy in a free-market economy

I. Read the dialogue in pairs. Be ready to dramatize it with your group mates.

Ukrainian: What is the role of accountancy in a free-market economy?

American: Well, in a free-market environment, accounting provides sort of a vehicle for transmitting information about the performance of enterprises to those with an interest in it.

Ukr.: Would it be correct, in that case, to sum up the basic functions of accounting in a market economy as measuring economic activity of an enterprise and its profit, showing changes in its financial position and ensuring that a fair report of the economic status and performance is made available to all those concerned.

Am.: Yes, you are right. I'd like to add that these functions are performed at two different levels.

Ukr.: We know that your accountants communicate financial information to many people. What users need financial information?

Am.: I'm coming to the point. One branch of accounting, called managerial accounting, provides information that managers use in making decisions within the firm. Other accountants prepare financial reports for outside users. This branch of accounting is known as financial accounting.

Ukr.: Financial accounting is only making its first steps in our country and we are having lots of teething problems. How does your accounting meet the needs of the users?

Am.: Our accounting standards and objectives of financial statements fully meet the users' needs for useful information.

Ukr.: What basic principles ensure the provision of such information in the manner the market requires?

Am.: First of all, accounts must be prepared on a going-concern basis.

Ukr.: What exactly does it mean?

Am.: It means accounting is based on the assumption that the business in question6 will continue to operate. Besides, accounts must reflect the economic substance of the situation rather than simply its legal form.

Ukr.: What other characteristics make information useful for the users?

Am.: First of all, I'd single out relevance, timeliness, prudence, reliability, materiality, consistency, and comparability.

Ukr.: As far as I know, these concepts are recognized internationally. But users of information often fail to get a true and fair view of business operations.

Am.: That depends on a number of factors. But I personally believe that in the present conditions, we all need to work harder to harmonize national accounting systems so as to make it easier for users to assess financial information.

Ukr.: I can't agree more, particularly taking into account growth of transnational corporations and increasing interdependence of financial markets.

Comments

sort of a vehicle for transmitting information – певний засіб передачі інформації

performance – показники діяльності, результати роботи

fair – тут чесний ,правильний, справедливий

a user –користувач

managerial accounting – управлінський облік

an outside user – зовнішній користувач

financial accounting – фінансовий облік

teething problems – проблеми, що виникають на етапі становлення (початковому етапі)

going-concern basis – принцип діючого підприємства

assumption – припущення; привласнення

economic substance – економічна сутність

relevance – релевантність, доречність

timeliness – вчасність

prudence – здоровий глузд; передбачливість

reliability – надійність

consistency – логічність; послідовність

true and fair view – правильне уявлення (про що-небудь)

to harmonize – гармонізувати, зближати