Английский язык = English. Учебное пособие-1

2)double-entry system;

3)retained earnings;

4)the way the transactions are recorded.

Exercise 3. Get ready to speak on the key accounting concepts using the following words and word combinations:

Exact science, financial records, external and income-tax assessment purposes; company’s financial position, income, taxes, GAAP, human judgement; to use, to keep, to present, to minimize, to limit; to conform to; to report.

III. Read Text C and answer the following questions.

1.What elements does the balance sheet include?

2.How often is a balance sheet prepared by companies?

3.What is a fiscal year?

TEXT С

A Balance Sheet

A balance sheet, also known as a statement of financial position, is a kind of “snapshot” of where a company is, financially speaking, at one moment in time. It includes all the elements in the accounting equation, showing the balance between assets on the one hand and liabilities and owners’ equity on the other.

Every company prepares a balance sheet at least once a year, most often at the end of the calendar year, covering from January 1 to December 31. However, many business and government bodies use a fiscal year, which may be any 12 consecutive months. For example, a business may choose a fiscal year that runs from June 1 to May 31 because its peak selling season ends in May. Its fiscal year would then correspond to its full annual cycle of manufacturing and selling. Some companies prepare a balance sheet more often than once a year, perhaps at the end of each month or quarter. Thus, every balance sheet is dated to show when the financial “snapshot” was taken [16, p. 489].

IV. Translate Text D in writing.

41

TEXT D

Extract from Accounting Law

Law XVI of 1998 on Accounting. The purpose of this Law is to provide accounting regulations in line with international accounting principles, so that information can be provided which ensures a realistic and fair view of the income-genera- ting capabilities, net assets, financial positions and future strategies of corporate entities covered by the law.

To that end, Parliament hereby creates the following law on Accounting:

Section 1

General Provisions The Purpose of the Law

Paragraph 1

The Law defines the reporting and book-keeping obligations of those entities which are subject to it, the principles to be applied in the preparation of the reports and in the book-keeping, as well as the requirements relating to disclosure, publication and auditing.

The Application of the Law

Paragraph 2

1.The Law shall apply to all participants on the market from whose operations, persons and legal entities require information.

2.The Law applies to

a)Entrepreneurs;

b)Government financed organisations;

c)Special rules will apply to Central Bank and all registered banks.

Accounting and Book-keeping Obligations

Paragraph 14

The basic principles determined under paragraph 15 shall be used in preparing reports and keeping the accounting records of entities. These principles will be the basis for entities to declare their accounting policies and bases and will be in line with the generally accepted accounting principles (GAAP), international accounting standards and the Directives of the European Union.

42

Accounting Principles

Paragraph 15

In preparing reports and in book-keeping, the assumption shall be made that the entrepreneurs shall be able to continue their operations into the foreseeable future, and that there will be no termination or significant reduction of operations for any reason (The Principle of Going Concern) [16, p. 109].

KEY TERMS EXERCISES

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

Exercise 2. Choose the correct statement.

1.The accounting equation can be kept in balance by

a)increasing both assets and owner’s equity by the same amount;

b)increasing both assets and liabilities by the same amount;

c)exchanging one asset for another;

d)doing all of the mentioned above.

43

2.If a firm has assets of $500,000 and liabilities of $200,000, then the owners’ equity must be

a)$700,000;

b)$300,000;

c)$200,000;

d)$500,000;

e)none of the mentioned above.

3.The system which requires two entries for every transaction so that the accounting equation is constantly kept in balance is known as

a)a dual accounting system;

b)checks and balances;

c)double-entry book-keeping;

d)cross-balance book-keeping.

ORAL SPEECH SECTION

Exercise 1. Read the dialogues and decide what kind of changes should be made in the company.

Illustrative Dialogue 1

The Financial Controller is talking with his subordinate, the Financial Accountant. They are discussing changes which must be made to make the Primrose accounting system conform fully with group accounting procedures. They also have to ensure that the system produces the information needed to develop an improved cost accounting system based on activity costing.

FC: I see that the General Accounting System has been running on the minicomputer for nine months. So you and your staff should be familiar with each module.

FA: Yes, it was difficult at the beginning, and we had to use the telephone helpline a lot and we did find a few bugs. But on the whole, we got good software support.

FC: Well, I hope those bugs have all been ironed out because now we’ve got to make some changes to the whole system...

44

FA: Changes now? Isn’t it rather late in the day for changes? Our financial year ends in only four months.

FC: I think it’ll be OK. The software itself won’t have to be modified. But we must make greater use of the General Ledger and Costing modules so as to produce the additional information which the Group Finance Department needs and to develop an activity-based costing system. Later next year, we shall probably have to install another company on the system.

FA: Will that be a wholly-owned subsidiary or an associated company?

FC: It could be either. In any case, we must be ready to use the system to produce consolidated accounts.

Notes:

...each module... – Accounting software has different sections dealing with different parts of the accounts

...the telephone helpline... – a service provided by software firms to help customers get over difficulties using their programmes

...those bugs have been ironed out – (bugs = electronic problems which interfere with communications) ironed out = smoothed out

Illustrative Dialogue 2

The Financial Controller continues his conversation with the Financial Accountant. They go on to talk about things they will have to do as a result of making changes in the Primrose accounting system.

FC: In any case, we must be ready to use the system to produce consolidated accounts.

FA: That means we’ll have to modify the whole coding system. It’ll affect the Nominal Ledger Codes, the Cost Centre Codes, even the Departmental Codes...

FC: That’s certainly true. But don’t forget we must still be able to produce our local Flowery Statutory Accounts in the exact format laid down by the Accounting Law. So we can’t change the Chart of Accounts too much.

FA: It shouldn’t be a problem. The software allows us to use two sets of accounting codes. We could use one set for UK reporting purposes and the other for Flowery Statutory Ac-

45

counts. We can also add more digits to the Nominal Ledger Code to allow us to analyse the transactions by activity.

FC: Excellent! Now let’s see. For each activity we’ll have to calculate the investment of fixed assets as well as the revenue and expenses which it generates.

FA: It’s going to take a lot of work to calculate expenses by activity such as depreciation, energy consumption, maintenance, the cost of space used, insurance and so on.

FC: Yes, you’re right there. The problem is to decide which activities we must use. We definitely need to track expenses in the areas of procurement, materials handling, inspection, production, order processing, selling and after-sales service...

FA: The list is endless. I’d better talk to the departmental managers and agree with them the key activities in their areas. Mind you, we could end up with too many activities... [20, p. 111]

Notes:

Statutory Account – the forms of accounts laid down by law or statute

in the exact format – the layout or design of the accounts

Exercise 2. Give short answers to these questions.

Model 1: Who is the Financial Controller talking to? – To his subordinate.

Model 2: What are they discussing? – Changes to be made.

1.What do Financial Controller and Financial Accountant have to do?

2.What do they need to improve?

3.What did they find on telephone helpline?

4.What has been ironed out?

5.What interfered with communications?

6.What must they make greater use of?

7.What does the Financial Department need?

8.What do they need to produce?

9.What must they be ready to produce?

10.What must they be ready to use?

11.What does the software allow to use?

46

12.What can they add to the Nominal Ledger Code?

13.Who does Financial Accountant want to agree?

14.What will they have to calculate?

Exercise 3. Fill in the missing question words and give short answers to these questions based on the dialogue between a financial controller and a financial accountant.

Model: … are they discussing? –What are they discussing? – Changes.

1.… is the Financial controller worried about?

2.… does the financial year end?

3.… of company will they have to install on the system?

4.… months has the General Accounting System been running on the minicomputer?

5.… can the system be used for?

6.… is right about calculations?

7.… does investment generate?

Exercise 4. Find the answers to the following questions.

1.What are bugs?

a)beetles b) electronic problems c) some mistakes d) interest charges

2.What is a telephone helpline?

a)a service to help to get over difficulties with software

b)a software support equipment

3.What did the management decide to do?

a)to train the staff b) to eliminate the mistakes c) to get more information d) to improve the accounting system

4.What Financial document do they have to use more?

a)Cost Centre Codes b) Chart of Accounts c) General Ledger d) Nominal Ledger Codes

5.The Financial Controller mentions two sets of accounting codes. What are they used for?

a)UK reporting purposes b) Statutory Accounts c) local accounts d) consolidated accounts

47

Exercise 5. Ask and answer questions. Start your answers with

I think..., I believe… .

1.Why the department has examined the costing methods.

2.What overheads are.

3.When they had to use the telephone helpline.

4.How long it takes to calculate expenses by activity.

5.Who should be familiar with each module.

6.What kind of activities they must use.

7.What they have to ensure.

8.How the cost driver may be expressed.

9.If it will be a wholly-owned subsidiary or an associated company.

Exercise 6. Work in pairs. Make up dialogues, using the words given in the box.

Model:

A:So you’ve decided to redecorate the offices. When will work on that be starting?

B:Well, it should be starting next Monday but there may be some delay.

48

Exercise 7. Express your agreement or disagreement with the following statements.

1.The Primrose accounting system produces all the necessary information.

2.The staff of the company is highly-qualified.

3.The computer software is up-to-date.

4.It will not take lot of time to do the changes.

5.The accounting department makes a good use of the General Ledger and Costing modules.

6.The Group Finance Department needs to develop an acti- vity-based costing system.

7.The whole coding system of the company will be modified.

8.The local Statutory accounts will not be produced in the exact format laid down by the Accounting Law.

9.The Chart of Accounts will be much changed.

10.More digits added to the Nominal Ledger Code will enable to analyze the transactions by activity.

11.Calculating expenses by activity will take a lot of time.

12.The departmental managers will do all the changes.

Exercise 8. Complete the dialogues.

1)A.: Well, I see you and your staff are familiar with each module.

B.: …

A:I hope those things have been done because now we need to make some changes.

B:…

2)A: Isn’t it rather late in the day for changes?

B:…

A:Well, I suppose we could do it later next week.

B:…

3)A: What do you think head office would say about this idea?

B:…

A:I know we won’t be able to reduce some costs.

B:…

4)A: Later we shall probably install another company on the system.

B:And of course …

49

A:It could be either. In any case we must be ready to use the system to produce consolidated accounts.

B:…?

5)A: The modified system will affect all the Codes.

B:…

A:It shouldn’t be a problem. The software allows us to use two sets of accounting codes.

B:…

6)A: For each activity we’ll have to calculate the investment of fixed assets as well as the revenue and expenses which it generates.

B:…

A:Yes, you are right here. The problem is to decide which activities we must use.

B:…

Exercise 9. Work in pairs. Make up short dialogues and act them out taking the roles of a manager and a financial controller.

1.You want to get the information about the key activities.

2.You try to agree the key activities.

3.The Statutory Account has not been prepared on time.

4.The software is not working properly.

5.There is not enough information which the Group Finance Department needs.

6.You want the staff to be familiar with the new software.

7.You suggest developing an activity-based costing system.

8.One of you has to make a phone call in a few minutes.

9.The company’s accounts lack some information.

10.It’s impossible to do changes the same day.

Exercise 10. Look at these examples and assess the degree of probability of something happening in the future.

1.I am sure I will go well.

2.I am confident it will go well.

3.We expect the work to be completed by next month.

4.There is a good chance of promotion.

5.Housing is likely to be something of a problem.

6.There is some hope of sales rising.

50