- •Which word?
- •Share vs. Stock
- •Task 10. Practice reading the following words.
- •Task 11. Read the text. What is Finance? (Part I)
- •Vocabulary notes:
- •Task 13. Agree or disagree with the following statements.
- •Task 15. Find in the text “What is Finance?” (Part I) (Task 11) the words opposite in meaning to the following:
- •Which word?
- •Income / earnings / revenue
- •What three basic things do companies do when they lack money to cover operating costs?
- •Lesson 2
- •Which word?
- •Fund vs finance
- •Task 3. Practice reading the following words.
- •Task 4. Read the text. What is Finance? (Part II)
- •Vocabulary notes:
- •Which word?
- •Task 15. Fill in the blanks with the most appropriate terms from the box.
- •Lesson 3
- •Accounting Connected with the period of twelve months over which a government or a company prepares a full set of financial records, or part of this period
- •Which word?
- •Fiscal vs. Financial
- •Year in Year out
- •Vocabulary Notes:
- •Which word?
- •Fiscal Crises vs. Financial Crises
- •Vocabulary Notes:
- •Lesson 1
- •Which word?
- •Account / bill / invoice / check / tab
- •Accounting Overview
- •Vocabulary Notes:
- •Task 18. Fill in the blanks with the most appropriate terms from the box. Translate the passage.
- •Lesson 2
- •Accounting Overview
- •Vocabulary Notes:
- •Task 4. Give number of the paragraph(s) in which they discuss …
- •Task 9. Fill in the blanks with the most appropriate terms from the box. Translate the passage.
Lesson 2
Task 1. Study some more meanings of the word “ACCOUNT” by means of the following example sentences.
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Task 2. Practice reading the following words.
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Task 3. Read the text.
Accounting Overview
(Part II)
1. Accounting can be classified into two categories: financial accounting and managerial (or management) accounting. Financial accounting generates reports and communicates them to external decision-makers (stockholders, creditors, customers, suppliers, and financial analysts) so that they can evaluate how well the business works. Management accounting provides internal decision-makers that are charged with profitability and liquidity of their business with information about financing, investing and operating activities.
2. The distinction between financial accounting and management accounting is reflected in the professional orientation of accountants themselves. They may be divided into two groups: public accountants and private, or corporate, accountants.
3. Public accountants – are independent outsiders who provide accounting services for businesses and other organizations. Public accountants are independent of the businesses, organizations, and individuals they serve. They are retained to prepare financial statements for individuals and some small organizations. For larger companies they are retained to prepare reports on the fairness of those statements.
4. Public accountants who fulfil rigorous requirements for education and experience (pass an examination) become certified public accountants (CPAs).
5. Private accountants, sometimes called corporate accountants, are those employed by a business, government agency, or non-profit corporation to supervise the accounting system and the bookkeeping staff. They are also responsible for generating and interpreting financial reports. Many private accountants are CPAs; however a growing number are certified management accountants (CMAs), a relatively new designation that indicates they have passed a test comparable in difficulty to the CPA exam.
6. In all their work with financial data, accountants are guided by two fundamental concepts: the accounting equation and double-entry bookkeeping. Both were developed centuries ago but remain central to the accounting process.
7. As is known, wealth does not consist of assets alone; it is what remains after liabilities have been deducted from assets. The remainder is called owner’s equity. This simple observation is the basis for the all-important accounting equation: Assets = Liabilities + Owner’s Equity. The company’s liabilities are placed before owner’s equity in the accounting equation because creditors have first claim on assets. After liabilities are paid, anything left over belongs to the owners or, in the case of corporation, to the shareholders.
8. However, to emphasize the amount of owner’s equity, the accounting equation may be written as: Assets – Liabilities = Owner’s Equity.
9. Whichever form is used, the relationship of assets, liabilities, and owner’s equity remains in balance; in other words, one side of the equation always equals the other side.
10. To keep the accounting equation in balance, companies use a double-entry system that records every transaction affecting assets, liabilities, or owner’s equity. This system which dates back to 1494 is at the heart of modern financial accounting.
11. Double-entry bookkeeping requires a two-part, “give and get” entry for every transaction: a debit in one account, and a corresponding credit in another account. The sum of all debits should always equal the sum of all credits, providing a simple way to check for errors.
12. Accounting is not an exact science. Using the same financial data, honest accountants may legitimately develop a wide range of results depending on the assumptions they make and the way they interpret the accounting rules.
13. In order to achieve a standardized system, the accounting process follows accounting principles and rules. Regardless of the type of business or the amount of money involved, common procedures of handling and presenting financial information are used. Incoming money (revenues) and outgoing money (expenditures) are carefully monitored, and transactions are summarized in financial statements, which reflect the major financial activities of an organization.