English for Economists. Практикум

UNIT 6

1. Find the words in the text that can be used as nouns and verbs. Translate them.

Example: A record — to record.

Give the examples of your own.

2. How well do you know the different types of accounting and different branches of the accounting profession? Match the terms with the definition in the box below:

Accounting, auditing, bookkeeping, cost accounting, creative accounting, managerial or management accounting, tax accounting

1.Calculating all expenses involved in producing something, including materials, labour, and other expenses.

2.Calculating how much an individual or a company will have to pay the local and national governments.

3.Inspecting and reporting an accounts and financial records.

4.Preparing financial statements showing income and expenditure, assets and liabilities.

5.Providing information that will allow a business to make decisions, plan future operations and develop business strategies.

6.Using all available accounting procedures and tricks to disguise the true financial position of a company.

7.Writing down the details of transactions (debits and credits).

Main Issues of Accounting and Financial Statements

Accounting shows a financial picture of the firm. In general accounting means keeping financial records, recording income and expenditure, valuing assets and liabilities, and so on. An accounting department records and measures the activity of

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business. It reports on the effects of the transactions on the firm's financial condition. Accounting records give a very important data. It's used by management, stockholders, creditors, independent analysts, banks and government.

There are several types of accounting. Managerial accounting implies preparing budgets and other financial reports necessary for management. Tax accounting is calculating an individual's or a company's liability for tax. Cost accounting means working out the unit cost of products, including materials, labour and all other expenses. There is also a special type of accounting — 'creative accounting', which means using all available accounting procedures and trick to disguise the true financial position of a company.

Probably there are two major questions that the managers or owners of the business want to know: first, whether or not the business is operating at a profit, second, they will want to know whether or not the business will be able to meet its commitments as they fall due; and so not have to close down owing to lack of funds. Both of these questions should be answered by the use of the accounting data of the firm.

Company law specifies that shareholders must be given certain financial information. Companies generally include three financial statements in their annual report.

The profit and loss account or income statement shows revenue and expenditure.

It usually gives figures for total sales or turnover and costs and overheads. The first figure should obviously be higher than the second - there should be a profit.

The balance sheet shows the company's financial situation on a particular date, generally the last day of the financial year. It lists the company's assets, its liabilities and shareholders' funds. Business's assets include debtors as it is assumed that these will be paid.

Liabilities include creditors, as these will have to be paid. These are debts to suppliers, lenders, the tax authorities. Debts that have to be paid within a year are current liabilities, and those payable in more than a year are long-term liabilities, for example bank loans.

Also there is the Statement of owner's equity which represents a summary of the changes in the owner's equity during a specific time period, such as a month or a year — dynamics.

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Vocabulary

Expenditure — расход.

Asset — активы.

Liability — обязательство.

Data — данные.

Stockholder — акционер.

Tax — налог.

Disguise — скрывать.

Debtor — заемщик, должник.

Issue — выпускать.

Exercise 1. Work with a dictionary. Which basic accounting words are defined below?

1.All the money received from business activities during a given period: a) assets;

b) income;

c) transactions.

2.All money that a business spends on goods or services during a given period: a) debts;

b) expenditures; c) liabilities.

3.A financial operating plan showing expected income and expenditure:

a)account;

b)budget;

c)financial statement.

4.Anything owned by a business — cash, machines, equipment, etc.: a) asset;

b) income; c) revenue.

5.All the money that a company will have to pay to someone else in the future including debts, taxes and interest payments:

a) debts;

b) expenditure; c) liabilities.

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6.An entry in an account, recording a payment made: a) credit;

b) debt; c) debit.

7.An entry in an account, recording a payment received: a) credit;

b) debt; c) income.

Exercise 2. Suggest Russian equivalents for the words and wordcombinations given below:

Keep financial record, financial condition, liability for tax, income statement, balance sheet, current liabilities, long-term liabilities, bank loans.

Exercise 3. Mark the sentences T (true) or F (false):

1.Accounting shows financial condition of the firm.

2.An accounting department works with clients of the firm.

3.Managerial Accounting implies preparing budgets and other financial reports necessary for banking.

4.Managers of the firm want to know if the business is operating at a profit or if it will be able to meet its commitments.

5.The profit and loss account or income statement shows assets.

6. The balance sheet demonstrates the financial picture of the company on a definite date, generally last day of the financial year.

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UNIT 7

1. Find synonyms for the following words in the text:

Need, escape, regulate, complex, to hide, source, kinds, instrument, to gain, help

2.Give English equivalents for the word-combinations given below:

1.Покупать новое оборудование.

2.Страхование здоровья.

3.Уменьшать подоходный налог.

4.Налог на прибыль.

5.Капиталовложение.

6.Головной офис.

7.Прогрессивные налоги.

8.Регрессивные налоги.

9.Налог на наследство.

10.Оплачивать налоги.

Taxation. Its types and principles

It goes without saying that taxation is a necessity because it's a means to pay for the services that the government provides us with. Policemen, soldiers, ministers are paid from this money; schools, hospitals, kindergartens are built with the help of this money as well. It seems to me that this is the main function of taxes.

As it was said earlier all people are aware of the necessity to pay taxes but nevertheless they try to avoid it. Some people prefer to do it illegally I mean so called tax evasion. For example there are people, who are self-employed, and it's very difficult for the government to control their income; some criminal organizations tend to pass money through a series of companies in very complicated transactions in order to disguise its origin from tax inspectors and the police (this is known as money laundering). But there are also legal ways that are called tax avoidance, for instance a company can give its employees some perks like a company car, subsidized lunches, free health insurance, etc. in order to reduce income tax liability. It's only one of the ways; companies have a variety of ways of avoiding tax on profit. They can

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also spend money on buying new equipment (it's usually called capital expenditure). Multinational companies often set up their head offices in countries such as Liechtenstein, Monaco, the Cayman Islands, and the Bahamas, where taxes are low, such countries are known as tax havens.

As far as types of taxes are concerned here it's necessary to admit next types:

1.Progressive taxes implement that those whose income is higher pay more. Here can be used a principle that "the more you earn, the more you pay". Among such taxes there is an income tax, a property tax, an inheritance tax, etc.

2.Regressive taxes are the same for all people. Regressive taxes include sales taxes, value added taxes, excise taxes, etc. Proportional taxes implement that people pay a certain percentage regardless of the size of their incomes.

It's also necessary to mention two principles of taxation:

The benefit received principle states that those who benefits from government programs are to pay taxes.

The ability-to-pay principle states that only those people who are able to pay taxes should pay them.

Vocabulary

Dissuade — отговаривать.

Tax evasion — уклонение от налога.

Self-employed — работающий «на себя».

Insurance — страхование.

Reduce — уменьшать.

Profit — прибыль.

Implement — осуществлять.

Benefit — польза, выгода.

Exercise 1. Find the words in the text that mean the following:

1.A means by which governments finance their expenditure by imposing charges on citizens and corporate entities.

2.To supply or equip.

3.To give money to someone for something you want to buy or for services provided.

4.Sole-proprietor or partner in a partnership to who m the legal requirements under a contract of employment do not apply.

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5.Agreement, contract, exchange, understanding, or transfer of cash or property that occurs between two or more parties and establishes a legal obligation. Also called booking or reservation.

6.The flow of cash or cash-equivalents received from work (wage or salary), capital (interest or profit), or land (rent).

7.An individual who works part-time or full-time under a contract of employment, whether oral or written, express or implied, and has recognized rights and duties. Also called worker.

8.A plan that covers or shares the expenses associated with health care.

Exercise 2. Answer the questions given below:

1.What is the main function of taxation?

2.How do we call the act of avoidance to pay taxes? How do some companies act to lessen taxes?

3.In what countries are taxes lower?

4.What kinds of taxes do progressive taxes include?

5.What type of taxes do you know?

Exercise 3. Discussion.

Answer the questions and discuss them with your group-mates:

1.Do all government spending have to be paid by taxation?

2.Which different taxes can you name?

3.The same amount of money can be taxed more than one. Can you give any examples of this?

Exercise 4. Give your opinion to Benjamin Franklin’s statement:

“But in these words nothing can be said to be certain, except death and taxes”.

Agree or disagree with it.

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UNIT 8

1. Look at the words from the text and complete the table:

As the name suggests, "sole proprietorship" refers to a business that is owned by a single owner and should not be confused with a corporation. There are no corporate taxes involved and the sole proprietor pays income tax on the profits generated. The person who organized the business pays personal income taxes on the profits made. This makes the accounting procedure relatively simple for the sole proprietor, who also enjoys complete autonomy in terms of making business decisions.

Setting up a sole proprietorship is easy. One of the main steps is to obtain a local business license (a sales tax permit may also be required). For certain businesses, such as restaurants or legal practices, you may need additional local or state licenses. Legal regulations and licenses aside, there are other major factors to consider when setting up a sole proprietorship. You will have to create a business plan, develop marketing and advertising campaigns, set up a budget, and find ways to fund your business.

Advantages and Disadvantages of a sole proprietorship

Many business owners choose to operate as a sole proprietorship to alleviate the difficult tax procedures that go along with other forms of operation. As a sole proprietor, you would simply have to file an individual income tax return (IRS Form 1040) including your business losses and profits. There are no restrictions on the number of people you can hire, and from the tax and legal perspective there is no distinction between you and your business. You can therefore hire as many people as you want and also recruit independent contractors if need be. Being in complete control of their business, sole proprietors make all the business decisions keeping law in mind.

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Sole proprietorship is not for every business owners especially business owners that are not willing to assume all risks. Unlike a corporation or LLC, your business doesn't exist as a separate legal entity. All your personal wealth and assets are linked to the business. Another downside is the inability to raise capital easily. Proprietors cannot sell shares the way other corporations do, so they have to seek out alternative methods to raise the necessary capital to expand their business.

Choosing the best business structure will ultimately impact the success of your business. Setting up a sole proprietorship is the easy and quick way to setup a business, but may not be the best structure for your operation. Make sure you weigh all the pros and cons before deciding if this structure will work for you.

Vocabulary

Sole-proprietorship — индивидуальный предприниматель.

Tax — налог.

Income — доход, прибыль.

License — лицензия, разрешение.

Set up — организовать, учреждать.

Alleviate — уменьшить, облегчить.

File — подать.

Restriction — ограничение, запрет.

To assume — брать на себя.

Entity — организация, предприятие.

Expand — расширять.

Exercise 1:

1. Match the words as they occur together in the text. Give the translation:

2. Compose the sentences of your own using these phrases.

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Exercise 2. Read the text again and choose the best answer A, B or C to complete each sentence:

1.The term “sole proprietorship” describes a type of business that is owned by … a) an individual owner;

b) a company; c) a government.

2.Sole proprietor pays … on the profits that were made:

a)a fine;

b)a personal income taxes;

c)a bribe.

3. To start a business, such as restaurants or legal procedures, a proprietor may may need:

a)extra money;

b)good advice;

c)local or state licenses.

Exercise 3. Discussion. Write notes for a short presentation of the business plan for your future business.

You should mention:

1)what it does: it designs/ makes/ provides/ distributes/ sells/ organizes/ invests etc.;

2)what new you can offer to your customers: it offers some service/ product etc.;

3)what target group of your business is;

4)where it is located: It has an office/ a store/ a factory.

What is Corporation?

A business can be set up in a variety of ways, ranging from a soleproprietorship to a general partnership, a Limited Liability Company (LLC) to a corporation. Corporations are remarkably different from other forms of businesses in the sense that it is an independent legal entity that is separate from the people who own, control and manage it. Due to this recognition as an individual entity, it is viewed as a legal "person" in the view of tax laws, and can thus be engaged in business and contracts, can initiate lawsuits and itself be sued. It also must pay taxes.

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