VI. Read the first paragraph of the text again to decide which of the following statements best expresses its main idea.

1. The double-entry system is a backbone of accounting.

2. The double-entry system was a pre-condition of rapid economic development.

3. The importance of the double-entry system lies in the fact that its use made accounting records more comprehensive.

4. According to Goethe, it is the finest discovery of human intellect.

V. Read paragraph 2, then complete the following statements.

1. According to the text, the first book in Britain on the double-entry system ...

2. It was written by ...

3. No copy of this book ...

4. Later some more books on the double-entry system ...

5. English businessmen began ...

6. The advantage of double-entry lies in the fact that...

VI. Re-read paragraphs 3 and 4 to put the statements below into a logical order.

1. The double-entry system is designed in the way that it is always in balance.

2. The first large enterprise to use double-entry in Russia was the Demidov.

3. The double-entry system was first introduced in Russia under Peter I.

4. By the end of the 18th century the Demidov had acquired a sophisticated accounting technique.

5. Being based on the principle of duality the double-entry system regards each economic event in two aspects which balance each other.

6. It was first applied for the Army and Admiralty.

7. According to the double-entry system, each transaction must be recorded with at least one debit and one credit.

V. Re-read the text to answer the following questions.

1. What is the double-entry system for accounting? When did it evolve?

2. When did the first presentation of the double-entry appear?

3. In what book was it described?

4. What did Goethe say about double-entry book-keeping?

5. What was the importance of the double-entry system?

6. What was the state of affairs in accounting before the invention of the double-entry system?

7. What was the impact of the double-entry system on economic development of a country?

8. When was the first book on the double-entry system published in Britain?

9. What was the advantage of double-entry according to many historians of accounting?

10. When was the double-entry book-keeping first introduced in Russia?

11. Why is the double-entry system always in balance as a whole?

Accounting systems

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

design, sophistication, grocery store, refining, to appreciate, appropriate economic assessment, to weigh.

II. Read the text to find out what factors influence the choice of an accounting system.

1. As it is known, accounting is concerned with providing economic information for decision-making purposes. The accounting system must, therefore:

• gather relevant economic information;

• shape this information into a form which is suitable for users;

• communicate the information to users.

In practice, accounting systems can vary considerably in design and level of sophistication. Thus, the accounting system of a small grocery store may appear to be totally different in nature to the accounting system of an international oil exploration and refining business. However, there are certain elements which are common to all accounting systems and which need to be identified in order to appreciate the functioning of these systems.

2. These common elements are:

• Information collection — establishing procedures to ensure that relevant economic information is collected;

• Information recording — recording and classifying the collected information in a logical manner;

• Information evaluation — analysing the information which has been collected and recorded and arriving at an appropriate economic assessment;

• Information reporting — communicating the analysed information in the form of reports which are suitable for the needs of users.

When designing an accounting system for a business, many factors have to be taken into account, including:

• the cost of the system;

• the complexity of the system;

• the amount of detailed information the system is required to give.

For all users of the system, it is important to consider the costs of the system and to weigh these costs against the expected benefits.

3. The owner-manager of a small grocery store may be prepared to accept a relatively simple accounting system on the basis that it is inexpensive to operate. The owner-manager is likely to have a reasonable understanding of the financial position and performance of the business as a result of the day-to-day involvement in trading operations, and thus be familiar with the amount of trade carried out, the level of stock and cash, the condition of the premises and fittings, and so on. Although a complex accounting system may provide more accurate and detailed information, this information is not often vital and the costs of operating the system would outweigh the additional benefits derived.

A senior manager in an international oil exploration and refining business, however, may be responsible for different trading operations throughout the world, and cannot, therefore, be closely involved in day-to-day operations. In order to overcome the problem of remoteness the accounting system can become a manager's 'eyes and ears' providing information concerning the financial position and performance of trading operations. The complexity of the business and the needs of the manager for detailed information will mean that the accounting system is likely to be both sophisticated and expensive to operate. However, the benefits of the system in terms of improved economic decision-making should outweigh its costs.

Comments

a grocery store – овочевий магазин

an international oil exploration and refining business – міжнародний нафтовий та нафтопереробний бізнес

to appreciate – оцінювати

premises and fittings – будівлі та освітлювальні прилади

to outweigh – бути важчим, переважувати

to be closely involved in day-to-day operations – бути безпосередньо залученим до щоденних операцій

to become a manager's “eyes and ears” – стати „очима та вухами” менеджера (тобто стати помічником)

to be both sophisticated and expensive to operate – бути одночасно складним та дорогим для роботи

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

1) the functioning of the accounting system;

2) considerations to be guided by when choosing the design and complexity of the accounting system;

3) factors to be taken into account when designing the accounting system;

4) common elements to all accounting systems.