Английский язык = English. Учебное пособие-1

3.What is the story about inventory?

4.How can the author obtain a loan?

5.What did the author do not “to be in the red”?

The following poem may be a good way to stress the importance of cash flow information, especially in today’s environment. Even though the author’s objective was somewhat humorous, the poem does make an important point from the viewpoint of one lending money to a company:

Once upon a midnight dreary as I pondered weak and weary

Over many a quaint and curious volume of accounting lore, Seeking gimmicks (without scruple)

to squeeze through some new tax loophole,

Suddenly I heard a knock upon my door. Only this, and nothing more.

Then I felt a queasy tingling and I heard the cash a-jingling As a fearsome banker entered whom I’d often seen before.

His face was money-green and in his eyes there could be seen Dollar-signs that seemed to glitter as he reckoned up the score. “Cash flow”, the banker said, and nothing more.

I had always thought it fine to show a jet black bottom line, But the banker sounded a resounding, “No,

Your receivables are high, mounting upward toward the sky; Write-offs loom. What matters is cash flow”.

He repeated, “Watch cash flow”.

Then I tried to tell the story of our lovely inventory Which, though large, is full of most delightful stuff. But the banker saw its growth, and with a mighty oath He waved his arms and shouted, “Stop! Enough!

Pay the interest, and don’t give me any guff!”

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UNIT 6

INCOME AND REVENUE

1.Revenue Recognition and Income determination.

2.Cash-Collection Methods.

Grammar: If-clauses.

PHONETIC AND LEXICAL EXERCISES

Exercise 1. Read and pronounce the following words.

Exercise 2. Read the following words. Pay attention to the stress.

Compex, congress, interval, problem, activity, actual, general, local, object.

Exercise 3. Underline the suffixes and identify the part of speech of the following words. Translate them.

Shortage, annual, available, availability, productivity, advancement, signify, inevitable, inevitability, obligatory, ration, hardship, voluntary, scientific, partnership, homeless, precision.

Exercise 4. Find and write out the words ending in -age, -ment, -fy,

-able from Text A. Identify their part of speech. Translate them.

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Exercise 5. Form adjectives with the help of -able, -ible. Translate them.

Profit, recover, desire, collect, reason, determine.

Exercise 6. Underline the prefixes and suffixes in the words below and translate the words into Russian.

To measure – to re-measure, measurable, immeasurable, immeasurability;

to limit – limitation, unlimited, limitless;

to differ – different, indifferent, difference, indifference.

Exercise 7. Form the lines of words with the help of suffixes and prefixes.

To signify, to satisy, to develop, to depend.

Exercise 8. Read the words of the active vocabulary.

1)relevance – значимость

2)to match – сопоставлять

3)to estimate – оценивать

4)down payment – первый взнос

5)to defer – отсрочивать

6)completion – заполнение бумаг

7)due – сбор

8)utility – полезность

9)inputs – затраты

10)labour inputs – затраты труда

11)to assess – оценить

12)to overlap – пересекаться

13)to recognize – распознавать

14)fair value – стоимость в текущих ценах

15)cost-recovery – возмещение издержек производства

16)break-even point – точка нулевой прибыли

Exercise 9. Match the equivalents from the two columns.

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Exercise 10. Translate the following sentences into Russian.

1.The government was short of money because of falling oil revenues.

2.People on fixed incomes are hurt by inflation.

3.As the input of energy is increased, the volume gets louder.

4.Her remarks have increased speculation about a possible fall in interest rate.

5.The value of the project was estimated at several thousand pounds.

6.It’s too early to assess the effects of the new legislation.

7.You must recognize the difficult position the company is in.

Exercise 11. Choose the correct word from those given in brackets.

1.(Revenue / value) is income especially that which government receives as tax.

2.Half of our (income / supply) goes on rent.

3.The payment (postpones / was deferred) until the company signed the contract.

4.I (evaluated / associated) the cost exactly correct.

5.He can’t (match / recognize) his spending to his income.

6.They (think / assess) the value of the house at £60 000.

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7. The government (recognized / appreciated) his services by making him a lord.

Exercise 12. Arrange the following words in the pairs of synonyms.

To assess, income, to overlap, primary payments, down payments, to duplicate, profit, to distinguish, to recognize, to estimate.

Exercise 13. Pay attention to the conversion “increase – to increase”.

Translate the sentences into Russian.

1.They have increased the price of petrol by almost 20 %.

2.Taxes are on the increase.

3.Revenues are defined as increases in net assets.

4.Timely information about revenue, income and cash flows increases the relevance of the reported information.

Exercise 14. Translate the following sentences paying attention to the meanings of the word statement.

1.The punishment for making false statements to the tax authorities can be severe.

2.I get a bank statement every month.

3.The details of the agreement need a more exact statement.

Exercise 15. Find out word combinations with the word utility in

Text A. Translate them. Make use of an economic dictionary.

GRAMMAR EXERCISES

Exercise 1. Read the following examples and define the tenses.

1.If the goods are shipped after the 1st of December, we shall not accept them.

2.If we received the documents tomorrow, we should start loading the goods on Monday.

3.If your instructions had been received ten days ago, the goods would have been shipped by “Svir” yesterday.

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Exercise 2. Translate the sentences into Russian and identify the type of a conditional clause.

1.If no services have been provided by the franchisor at the time, the initial payment would be received.

2.Any payments made to the franchisor will be refunded if for any reason the franchisee fails to open.

3.If the customer defaulted on a credit sale contract, the merchandise would be repossessed by the seller.

4.The net receivable may be interpreted if the cost unrecovers.

5.If the holding gains and losses were frequent and material, the firm should use another method.

6.If the number of acts to be performed is not fixed, revenue shall be recognized on the basis of the number of acts performed.

7.If actual construction costs in a year are $150,000, the total income on the contract will be $50,000.

8.If the sum of construction in progress and income had exceeded the billings on the construction to date, the net debit amount would have been reported on the balance sheet as an asset.

Exercise 3. Open the brackets.

1.He would leave Moscow tonight if he (get) the necessary documents.

2.If they (call) at the office yesterday, they would have found me there.

3.Had the letter of credit been opened by the buyers before the 10th of March, the goods (ship) by the steamer.

4.If the weather (be) so hot last month, the goods would not have gone bad during transportation.

5.If you (be) to guarantee a regular supply of these goods, we would be prepared to conclude a new contract.

6.If three machines or more were ordered, the price (reduce) by 5 per cent.

7.If the machinery (be) to be dispatched from the factory to the port of loading later than tomorrow, we shall miss the steamer.

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READING SECTION

I. Read Text A and do post-text exercises.

TEXT A

Revenue Recognition and Income Determination.

An Overview of Revenue Concepts

Under accrual accounting, accountants measure the net cash flow effects of earnings activities by recording and reporting transactions that have cash consequences as the transactions take place, rather than waiting until the cash is received or paid. In accrual accounting, the realization principle governs the recognition of revenue, and expenses are matched against revenues to determine income.

It is important to distinguish among the nature or definition of revenue, the measurement of revenue, and the recognition of revenue. Revenues are defined as increases in net assets from delivery or production of goods, rendering of services, or other activities that constitute a company’s major or primary operations. Revenues are measured at the fair value or cash equivalent price of assets received. Revenue recognition is a timing issue – when should revenue be recognized and reported in the income statement?

Revenue is earned throughout a company’s earnings process as value – in the form of time, place, and form utility – is added to the costs of productive inputs. For example, a company may acquire raw materials and add form utility by transforming these materials and labor inputs into a final product. Or a transportation company may add place utility to products by bringing them closer to final consumers. Earnings activities may overlap; that is, some goods may be sold while other goods are being produced. In addition, the economic resources used to generate revenue and income may benefit one product in one accounting period or many products over several accounting periods.

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Even though revenue may be earned continuously, it is impractical to recognize it on a continuous basis and it is infeasible to associate portions of total revenue with each activity that contributes to revenue. There are many points at which revenue could be recognized. Depending on the circumstances, revenue could be recognized during production, at the completion of production, while the completed product is awaiting sale, at the point of sale, or, for credit sales, when cash is collected. Accountants use the realization principle as a guideline for determining when revenue should be recognized. Realization refers to the occurrence of an event or events that reduce the uncertainty about the net cash flow effect of an earnings activity to an acceptable level. In practice, the realization principle sets forth the criteria used to determine when to recognize revenue.

1.The amount and timing of revenue are reasonably determinable.

2.The earnings process is complete or virtually complete. The two revenue recognition criteria illustrate how accoun-

tants must balance relevance and reliability of providing the financial reporting objective of providing information that assists users in predicting, evaluating and assessing cash flows.

On the one hand, timely information about revenue, income, and cash flows increases the relevance of the reported information. On the other hand, the information also must be reliable – verifiable and representationally faithful – in order to be useful. The revenue recognition criteria incorporate both qualitative characteristics [15, pp. 241, 243–244].

Exercise 1. Find the definition of revenue in the text. Copy out this definition into your notebook. Learn it.

Exercise 2. Find the sentences in the text which say how the realization principle governs the recognition of revenue.

Exercise 3. Name the criteria used to determine when to recognize revenue.

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Exercise 4. Connect two parts of the sentences. Translate them.

Exercise 5. Fill in the blanks with the words from the box.

Increases, issue, statement, acquire, utility, be earned, be recognized, incorporate, the earning process, verifiable, faithful, net.

1.Revenues are defined as ... in net assets.

2.Revenue recognition is a timing ... .

3.When should revenue be recognized and reported in the income ...?

4.A company may ... raw materials and add form ... by transforming these materials.

5.Revenue may ... ... continuously.

6.There are many points at which revenue could ... .

7.The revenue recognition criteria ... both qualitative characteristics.

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