Английский язык = English. Учебное пособие-1

commission is remitted to the consignor. Goods that are not sold are returned to the consignor. Even though consigned goods are in the possession of the consignee, the merchandise should be included in the inventory of the consignor because legal title remains with the consignor. Consigned goods should be included in inventory at cost to the consignor plus the costs of handling and shipping the goods to the consignee. An artist’s agreement to sell paintings on consignment through an art gallery is a typical consignment [15, p. 404].

TEXT D (2)

Service Transactions

Many service transactions result in an initial inflow of receivables instead of cash. When there is no basis for estimating collectibility of the receivables, a cash-collection method should be used. Since cost of goods sold does not arise with service transactions, the cost-recovery method appears to be appropriate for service transactions.

In practice, cash-collection methods are used primarily in real estate transactions. The instalment method is more popular than the cost-recovery method, in part because it is the method commonly used for income tax purposes. In spite of the greater popularity of the instalment method, we prefer the cost-recovery method on theoretical grounds. Postponement of revenue (gross profit) recognition until cash collection occurs is justified only when reasonable estimates of uncollectible accounts cannot be made. Yet the instalment method assumption – that is, for each dollar of cash collected, one portion is cost recovery and another portion is profit – is valid only if it is expected that the entire receivable arising from the sale will be collected. This expectation, however, is counter to the circumstances under which the instalment method is normally used. For this reason we prefer the cost-recovery method when there is any significant uncertainty about future cash inflows from receivables [15, p. 405].

151

KEY TERMS EXERCISES

Exercise 1. Match the words on the left with the definitions on the right.

Exercise 2. Choose the correct answer.

1.Which of the following is not a type of asset?

a)current;

b)fixed;

c)intangible;

d)retained earnings.

2.Cash, accounts, receivables, inventories and marketable securities are all examples of…

a)current assets;

b)fixed assets;

c)intangible assets;

d)current liabilities;

c)long-term liabilities.

3.What is the best advice in evaluating an annual report?

a)Ignore the footnotes, as they are unimportant.

152

b)Make comparisons with previous years and other companies in the industry.

c)Pay attention only to the net income figure.

d)Ignore the “subject to” clause.

ORAL SPEECH SECTION

Exercise 1. Read the illustrative dialogue and decide whether the company has a plan for cost reduction of its product.

Illustrative dialogue

How Much Does It Cost?

It is July 2013. The Financial Controller is again discussing the financial position of the company with the Managing Director. The Production Manager is also present.

FC: ... so overall the results of the first six months of 2013 are better than they were for the whole of 2012. Mind you, to make 2.2 per cent pre-tax profit on sales is a very poor performance and we are below the 2013 Plan.

MD: Yes. That doesn’t make it any better.

FC: The latest forecast is that the net profit for the twelve months of 1995 will be below our Plan, better than the 2012 figure, but not much above the figure for 2011. One good sign for the second six months is that both inventories and financial costs are down.

MD: So what are the main problem areas?

FC: Well, the main one is the low margin on sales of the Energy Saver, which is depressing profits. I must say that from a purely financial point of view, unless we can improve its sales and profit contribution, it would be better to consider discontinuing this product.

MD: Well, you know what the answer is to that: it’s the Primrose Group’s policy to increase worldwide sales of the Energy Saver, so there’s no question of dropping it.

FC: Well, I feel...

153

MD: As a matter of fact I’ve got a copy of the latest Head Office directive dealing with the Protocap. You can read it in your own office. You’ll see that our main task is to boost sales volumes and values of the Protocap and reduce unit costs.

On the other hand, I have already discussed the problem of increasing total sales value with the Marketing Manager. It’s clear we can’t raise prices because our competitors’ prices are already 2 per cent below our price in most markets.

FC: So our problem is how to boost sales and cut costs.

MD: We must see what extra turnover we need to achieve our net profit target, and then decide how to get those extra sales.

FC: I’ll need a sales forecast by product and by market with expected selling prices and selling costs.

MD: I’ll get together with the Marketing Manager and produce the figures you need. It’ll take a day or two. Meanwhile I want the two of you to produce a plan for cost reductions on the Energy Saver and show me the possible effects on the company’s net profits. Gentlemen, the principle task is to boost the Protocap sales, and we’ll achieve that by concentrating on our overseas markets. So we must find the most effective way of strengthening our position in Central and Eastern Europe. I’m setting up a task force to map out a strategy for expansion. It will consist of you two and the Marketing Manager. I’ll draft some terms of reference for you tomorrow and let Head Office know our intentions [20, p. 109].

Note:

the second six months – второе полугодие

Exercise 2. Answer the questions.

1.What is the financial position of the company?

2.What is the main task of the company?

3.What are the ways of reducing the production costs and boosting the volume of sales of the Protocap?

4.What figures does the Financial Controller want to know?

5.What is the marketing strategy of the company?

154

Exercise 3. Rearrange the words to make sentences. Mark whether they are true or false according to the dialogue.

1.Results / below / plan / six / first / are / the / of / the / months / the.

2.Costs / inventories / financial / and down / both / are.

3.Product / the / controller / suggested / the Financial / discounting.

4.Policy / the / Primrose / to decrease / is / Group’s / sales / worldwide.

5.Prices / are / per cent / 2 / the price / our / competitors / above.

6.To strengthening / position / Africa / its / company / is / in / going / the.

Exercise 4. Replace the words in italics by synonyms.

Model: Our main task is to reduce unit costs.

Our main task is to decrease unit costs.

1.The low margin on sales of the Energy Saver is depressing profits.

2.There’s no question of dropping the product.

3.Well, I feel….

4.I want you to produce a plan for cost reduction.

5.The Managing director has set up a task force to map up a strategy for expansion.

6.I’ll draft some terms of reference for you tomorrow.

7.What are the main problem areas?

Exercise 5. Work in pairs. Ask and answer questions about the following:

1)what the Financial Controller is discussing.

2)if the results of the first six months of this year are better than they were last year.

3)if the company is below or above the Plan.

4)what the latest forecast says.

5)what the main problem areas of the company are.

155

6)what the Financial Controller suggested.

7)what the latest Head office directions are.

8)why the company can’t raise prices.

9)how the company is going to boost sales.

10)what task the Managing Director gives to its stuff.

Exercise 6. Respond to the situation as shown in the example. Make use of the words in brackets.

Situation: The margin on sales is low. (to drop the product) Respond: The company has to drop the product.

1.Profit is below this year’s Plan. (to increase sales)

2.Our main task is to boost sales. (to develop advertising company)

3.Our competitors’ price is 2% below our price. (not to raise price)

4.We need to achieve our net profit target. (to produce a plan)

5.The company wants to strengthen its position on overseas markets. (to map out a strategy for expansion).

Exercise 7. Make up dialogues on the following situations.

1.Вы – главный бухгалтер. Ваш начальник просит предоставить отчет за первое полугодие текущего года. Вы сообщаете, что в целом показатели этого года лучше, чем цифры за данный период прошлого года. Но компания, тем не менее, не выполняет план продаж. Ваш начальник обеспокоен этой информацией. Его интересует прогноз на второе полугодие. Вы говорите, что согласно последним прогнозам чистая прибыль в этом году будет ниже запланированной, но выше, чем прошлогодние показатели. Положительной тенденцией полугодия является также снижение накладных расходов.

2.Начните разговор с подчиненными с приветствия и традиционных формул вежливости. Затем сообщите, что цель вашего совещания – определить пути улучшения деятельности компании и увеличение объема продаж. Вы говорите, что если не удастся увеличить прибыль с продаж данного продукта, его придется снять с производства. Ваши

156

UNIT 8

THE ACCOUNTING PROCESS

1.Recording Economic Events in a Journal.

2.Special Journals.

Grammar: The Complex Sentence. Asyndetical Connecting.

PHONETIC AND LEXICAL EXERCISES

Exercise 1. Practise the pronunciation of the following words and word combinations.

Accounting theory, accountant, record, the economic data, device, original entry, journal, chronological, appropriate, initial recording, entire, verification.

Exercise 2. Read the words of the active vocabulary.

1)account – ведомость;

2)credit – кредит;

3)data – данные, сведения;

4)debit – дебет;

5)entire – полный, целый;

6)entry – приход, занесение в торговые книги;

7)initial – начальный ;

8)record – запись, регистрация (фактов);

9)verification – проверка.

Exercise 3. Match the equivalents from the two columns.

158

160