Balancing the books

At the end of an accounting period, for example a year, bookkeepers prepare a trial balance which transfers the debit and credit balances of different accounts onto one page. As always, the total debits should equal the total credits. The accountants can then use these balances to prepare the organization’s financial statements.

IV. Answer the following questions

1. What are the examples of daily transactions?

2. Where is each type of transaction recorded?

3. What are the two aspects of every transaction?

4. What are raw materials?

5. What is the company’s stock?

6. What is a nominal ledger?

V. Match the words in the box with the definitions below. Use the texts to help you

credit creditors

ledger stock

debit debtors

inventory balance sheet

trial balance

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

7. the amount or value of a firm’s current assets that consist of raw materials, work in progress, and finished goods

8. a statement that shows the financial position of enterprise at a specified date

9. a statement of all the debit and credit balances in the ledger, drawn to test their equality.

VI. Find pairs of words as they occur in the text

1. to sell	a) a trial balance
2. to debit	b) transactions
3. to owe	c) total credits
4. to refer	d) balances
5. to record	e) raw materials
6. to equal	f) on credit
7. to buy	g) work correctly
8. to make	h) the stock account
9. to do	i) products
10. to prepare	k) to people
11. to use	l) money for goods and services

VII. Complete the sentences. Look at the texts to help you

1. ...... ..... ….. ….. shows where money comes from and where it goes: it is always transferred from one ....... to another one. Every event is entered twice – once as a credit and once as a ...... .

2. Most businesses record very frequent or numerous transactions in ..... .... or ....... .

3. The main account books are called ..... ......, and the book relating to creditors is called the ...... ...... .

4. In order to prepare financial statements, companies do a ........ ....... which copies all the debit and credit balances of different accounts onto a single page.