Английский язык = English. Учебное пособие-1

3.The management is trying to achieve this goal.

4.This public company quoted its shares on the Stock Exchange yesterday.

5.The government has already regulated this tax.

6.They had increased the sales before the recession took place.

7.Their suppliers used many papers in delivering items.

8.These bankers are investing on a regular basis.

Exercise 6. Find sentences in the Passive Voice in Text A. Explain the use of tense forms in these sentences.

READING SECTION

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

TEXT A

The Financial Statements

The financial statements are constructed by the following

These basic elements represent an entity’s economic resources, claims to or interests in its resources, and the financial effects of transactions or other economic events that cause changes in economic resources or claims to them.

Speaking about the elements of financial statements it is necessary to notice that definitions of the elements of financial statements are important because those definitions help in determining how a transaction or other economic event should be accounted for and reported in financial statements. For example, assume that a manufacturing company suddenly discovers that the land which it owns and on which its plant is located contains several thousand tons of valuable minerals. Should the

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minerals be recorded as an asset? Does this discovery create revenue? The definitions of asset and revenue should help to answer these questions. As another example, assume that a large corporation establishes a pension plan for its employees. The corporation agrees to give its employees credit for services rendered before the plan was adopted in determining their pension benefits when they retire. Is the obligation to pay those benefits whose amounts are based on prior service a liability at the date the pension plan is established? The definition of liability may be helpful in answering this question.

Assets are probable future economic benefits obtained or controlled by a particular entity as a result of past transactions or events. Three essential characteristics are present in the definition of an asset. First, an asset has future economic benefit or future service potential in the form of positive cash flows. Second, an entity can obtain the future economic benefit from use of the asset and can control other entities’ access to that benefit. For example, an interstate highway in front of a company’s factory, while probably beneficial to the company, is not an asset of the company, because other entities also have free use of the highway. On the other hand, an access road built by a company to its factory and controlled by that company is an asset. Finally, the transaction that gives rise to the future economic benefit has already occurred; that is, the asset’s existence is not dependent on a future transaction or event.

Liabilities are probable future sacrifices of economic benefits arising from present obligations of a particular entity to transfer assets or provide services to other entities in the future as a result of past transactions or events. Three characteristics of liabilities are included in this definition. First, a liability obligates a company to transfer cash or other assets, or to provide services, at some future time. For example, a dividend payable in cash is a liability because the declaration of a cash dividend obligates the company to transfer cash to stockholders on the payment date. A dividend distributable in stock of the declaring company, however, is not a liability because the

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obligation is to distribute the company’s own stock, instead of cash or other assets, to stockholders. Second, the obligation to transfer assets or to provide services must pertain to a particular entity. For example, if Company A guarantees to pay a note issued by Company B in the event that Company B is unable to pay the debt at maturity, Company A does not incur a liability as a result of the guarantee. Company A’s obligation as a guarantor becomes a liability only if Company B defaults on the note. Finally, the transaction or event that obligates the entity to transfer assets or provide services must already have taken place. Using the example that was given in our definition of assets, the agreement to purchase goods in the future does not give rise to a liability. A liability to pay for the goods arises only when the goods are received at a future date.

Revenues are inflows of assets or settlements of liabilities, or both, during a period as a result of the delivery or production of goods, the rendering of services, or other earnings activities that constitute an entity’s major or primary operation. Two essential characteristics of revenues are that revenues (1) arise from a company’s primary earnings activities and (2) are recurring or continuing in nature [15, pp. 37–38].

Notes:

a cash dividend – дивиденд, выплаченный наличными a stock – запас (товаров)

in stock – в ассортименте, в наличии на складе

Exercise 1. Name the elements with the help of which the financial statements are constructed.

Exercise 2. Find the sentences which give the definition of assets in text А.

Exercise 3. Find the answer to the question:

Why are definitions of the elements of financial statements so important?

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Exercise 4. Agree or disagree using the phrases “I’m afraid that’s false”, “I think that’s right”.

1.The elements of financial statements are competition, demand, exchange rate.

2.The elements of financial statements represent an entity’s economic resources.

3.An entity does not obtain the future economic benefit from use of the asset.

4.The asset’s existence is dependent on a future transaction or event.

5.A liability obligates a company to transfer cash or other assets.

6.A dividend payable in cash is not a liability.

7.The obligation to transfer assets or to provide services must not pertain to a particular entity.

8.Revenues do not arise from a company’s primary earnings activities.

Exercise 5. Answer the following questions.

1.What are the main elements of financial statements?

2.What do they represent?

3.What are assets?

4.What are essential characteristics of an asset?

5.What are liabilities?

6.When does a liability to pay for the goods arise?

7.What are the essential characteristics of revenues?

Exercise 6. Complete the sentences.

1.An entity can control other...

2.An interstate highway in front of a company’s factory is not...

3.A road built and controlled by a company is...

4.A dividend payable in cash is...

5.A cash dividend obligates the company...

6.A dividend distributable in stock of the declaring company is...

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Exercise 7. Give the descriptions of functions of the following terms:

a)revenues;

b)assets;

c)liabilities.

II. Read Text B and find the answer to the question. Is accounting information reliable?

TEXT B

The Reliability of Accounting Information

Accounting is not the 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. For example, many companies keep two sets of financial records – one for external reporting purposes and one for income tax-assessment purposes. Accountants present shareholders with a fair picture of the company’s financial position and the results of operation. However, for the tax collector, accountants use all the legal options the tax code allows to minimize the income subject to taxes.

The “creativity” an accountant can exercise is limited by generally accepted accounting principles. Although these principles are not legally binding on non-public companies, most accountants adhere to their provisions for all financial statements and report any deviations from GAAP in published financial statements. Moreover, financial statements that do not conform to current GAAP are not acceptable to the Securities and Exchange Commission in the filings required for issuing and trading stock. Nevertheless, it is important to realize that to a considerable extent, accounting numbers represent human judgement [15, p. 489].

Exercise 1. Divide the text into two parts and give a heading to each of them.

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III. Read Text C and entitle it.

TEXT C

Modern accounting dates back to the period of 1880 to 1920, when standard cost systems were first developed. Traditionally, accounting has concentrated on manufacturing operations, which provide the most comprehensive accounting problems.

Today in most corporations, the accounting system is the responsibility of the controller, who frequently reports directly to the president. The controller is responsible for internal accounting reports as well as external reports.

Many organizations have a separate internal audit department which provides a number of auditing and consulting services. To avoid conflicts of interest, this group is often independent of the controller’s office.

The controller’s office is distinct from the treasurer’s office in that the former concentrates on operating problems, while the latter concentrates on financial ones [15, p. 490].

Exercise 1. Choose the statements which characterize the main idea of Text C.

1.Accounting is not the exact science.

2.It is important to realize that accounting numbers represent human judgement.

3.Accounting information is not reliable.

4.Generally accepted accounting principles limit an accountant’s work.

5.Usually companies keep two sets of financial records.

6.Accountants use all the legal options to minimize the income subject to taxes.

Exercise 2. Speak about

a)the responsibilities of the controller;

b)modern accounting structure.

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IV. Translate Text D in writing.

TEXT D

Classification of Labor Costs

Labor costs can be broken down into five main categories: direct labor, idle time, overtime premium, and labor fringe benefits.

Direct labor consists of those factory labor costs which can be physically traced to the creation of products in a “hands on” sense.

Indirect labor consists of those factory labor costs which are supportive or supervisory in nature. These would include the labor costs of supervisors, superintendents, custodians, maintenance persons, and others whose services are essential to factory operations, but who do not work directly on the product.

Idle time represents the costs of direct labor workers who are unable to perform their assignments due to material shortages, power failures, and the like. Idle time is treated as part of manufacturing overhead.

Overtime premium consists of any amount paid above an employee’s base hourly rate.

For example, if the base rate is $6 per hour and the employee is paid time-and-a-half for overtime, then the overtime premium would be $3 per hour (not $ 9 per hour).

Overtime premium is not charged to specific jobs, but rather is included as part of manufacturing overhead.

Labor fringe benefits include employment related costs paid by the employer, such as insurance programs, retirement plans, etc.

Many firms include all such costs as part of manufacturing overhead.

Other firms include only the labor fringe benefits relating to indirect labor as part of manufacturing overhead and treat those benefits relating to direct labor as added direct labor costs [21, p. 51].

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KEY TERMS EXERCISES

Exercise 1. Match the following key terms with their meanings.

Exercise 2. Choose the right answer.

1.A liability obligates a company …

a)to buy goods;

b)to rise prices;

c)to transfer cash.

2.Revenues are …

a)future sacrifices;

b)gains;

c)inflows of assets.

3.An asset has future economic benefit in the form of …

a)positive cash flows;

b)fixed assets;

c)current.

4.An entity can obtain the future economic benefit from use of …

a)profit;

b)asset;

c)tax.

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ORAL SPEECH SECTION

Exercise 1. Read the illustrative dialogue and decide what collateral the company has got.

Illustrative dialogue

The Financial Controller of Primrose (Leeds) is on the phone to the Manager of the Treasury Department of the parent company in Birmingham.

FC: Look, I really need to discuss our local currency borrowings. As you must have read from my report, we’re having a difficult time this year and our borrowings have soared.

MTD: Yes, that was quite a jump, wasn’t it!

FC: The latest problem is that our bankers here won’t lend any more money on the strength of our 1994 financial statements. They want security. They’re asking for either collateral or a parent company guarantee.

MTD: Well, what collateral have you got?

FC: Unfortunately, since we rent our factory, we could only offer machinery and vehicles. I suspect they’d only be interested in the vehicles. Our machinery is too specialised and wouldn’t realise much on a cash sale. And the vehicles are mainly customised trucks.

MTD: Well, as you know, the Group Directors are extremely reluctant to give guarantees, especially to overseas operations and more so where the potential liability is in a currency subject to fluctuations. Do you think they would accept a Letter of Comfort?

FC: No, I’ve already asked them. They prefer a guarantee in US dollars.

MTD: Well, at present the group policy is to keep contingent liabilities to a minimum, ever since the Accounting Standard has required them to be reported in the UK statutory accounts [19, p. 112].

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Exercise 2. Give short positive answers to these questions.

Model 1: –Have you read my report? –Yes, I have. Model 2: –Do they want security? –Yes, they do.

1.Will our bankers lend any more money?

2.Are they asking for collateral guarantee?

3.Do you rent factory?

4.Could we only offer machinery?

5.Do they prefer a guarantee in US dollars?

6.Are the Group Directors reluctant to give guarantees to overseas operations?

7.Has the Accounting Standard required the company to be reported in the UK statutory accounts?

Exercise 3. Complete the sentences about the illustrative dialogue with question words and give short answers to these questions.

Model: …is on the phone to the Manager of the Treasury Department?

–Who is on the phone…? –The Financial Controller of Primrose is.

1.… did our borrowings soar?

2.… guarantee do the bankers want?

3.… is the potential liability in a currency subject to fluctuations?

4.… could we offer?

5.… is the latest problem?

6.… is reluctant to give guarantee?

7.… would they accept?

Exercise 4. Explain the meaning of the following words. Make use of the words in brackets.

Model: Руководитель (a person, to run, the company) Manager is a person who runs the company.

1.Гарантия (a thing, a company, to do of, money)

2.Финансовый отчет (a report, financial activity, any establishment, to issue)

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