Английский язык для бухгалтерского дела. English for Accounting. Учебное пособие

From this we can derive a definition of a balance sheet. A balance sheet, also known as a statement of financial position, is a statement drawn up at a particular date (in this case 1 July 2000) to show the value of assets of the business and how the finance for these was obtained. 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.

Table 1 is a balance sheet for Sweet Dreams Ice Cream, Inc., a small corporation that makes ice cream and sells it through its own shop. Most detailed balance sheets classify assets, liabilities, and owners’ equity into categories like those shown in Sweet Dreams’ balance sheet.

But no business can stand still while its financial condition is being examined. A business may make hundreds of transactions of various kinds every working day. Even during a holiday, office fixtures grow older and decrease in value, and interest on saving accounts accumulates. Yet the accountant must set up a balance sheet so that managers and other interested parties can evaluate the business’s financial position as if it were static.

Accordingly, 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.

Of course in large businesses transactions will be taking place with much greater frequency than in small ones. There will be a much greater variety of transactions. This variety will be most evident in businesses which are expanding or already have interests in a range of different activities. How suitable is the balance sheet as a means of recording the large number of different transactions that are taking place continuously?

Some thought should lead to the conclusion that it is not at all suitable. For a businessman to rewrite his balance sheet after each transaction or even after each week’s transactions would be quite timeconsuming. In addition it would not provide enough information about the actual transactions. If the balance sheet is so unsuitable to reflecting day- to-day changes, why people use it? The answer to this question is that it is an excellent way of learning that:

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-every transaction affects a business by altering either the assets or sources of finance or both, while;

-the fundamental relationship between sources of finance and assets does not alter.

Understanding these points is central for understanding accounting.

Table 1 SWEET DREAMS ICE CREAM, INC

Balance Sheet December 31, 2000*

* The categories used on this year-end balance sheet are typical. Analyze it. While reading consult the dictionary of terms at the end of the book.

COMPREHENSION CHECK

I.Match the Russian expressions with their Russian equivalents.

1.оборотные средства

2.долгосрочные внеоборотные активы

3.материальные активы

4.нематериальные активы

5.капитал собственника

6 торговая марка

7.общий капитал акционеров a. total shareholders’ equity

b. trademark

c. owner’s equity d. intangible assets. e. current assets

f. fixed assets

h. tangible assets

II. Match the terms (1-8) with their explanations (a-h).

1.balance sheet

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2.fiscal year

3.stock

4.calendar year

5.owner’s equity

6.current liabilities

7.current assets

8.income statement

a.financial statement showing how a business’s revenues compare with expenses for a given period of time.

b.obligations that must be met within a year.

c.twelve-month accounting period that begins on January 1 and ends on December 31.

d.Shares of ownership in a corporation.

e.financial statement that shows assets, liabilities and owner’s equity on a given date.

f.any 12 consecutive months used as an accounting period.

g.Portion of a company’s assets that belongs to the owners after obligations to all creditors have been met.

h.Cash and other items that can be turned into cash within one year.

III. For each beginning find an appropriate ending.

IV. What is wrong in the following statements? Say it in English.

1.The balance sheet doesn’t show the balance between assets on the one hand and liabilities and owners’ equity on the other.

2.Most detailed balance sheets only classify liabilities into categories.

3.Any business can stand still while its financial condition is being examined.

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4.There is no need for a company to prepare a balance sheet at least once a year.

5.The fiscal year of any business doesn’t correspond to its full annual cycle of manufacturing and selling.

V. Answer the questions on text A:

1.What is a balance sheet?

2.In what way must the accountant set up a balance sheet?

3.How often is a balance sheet generally prepared?

4.Why is the balance sheet thought to be not quite suitable as a means of recording the large number of different transactions?

5.What points are central for understanding accounting?

GRAMMAR GUIDE

The Infinitive

Study the following Table.

Table 1

The Infinitive has noun functions as well as verb functions

The Infinitive can be used:

1)in the function of a subject (подлежащее); e. g. To tell her the truth would be a mistake.

2)in the function of an object (дополнение); e. g. She did not want to be seen in such company.

3)in the function of an attribute (определение); e. g. The idea to use this method didn’t leave us.

She was the first to see the danger. It is just the book to read in the train.

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4)in the function of a predicative (часть составного сказуемого); e. g. His task was to book the tickets beforehand.

5)in the function of an adverbial modifier of purpose or result

(обстоятельства цели или следствия). e. g. He stood aside for us to pass in.

Dan is too young to take part in the competition.

The Infinitive can be used as a part of compound verbal predicate

(составное глагольное сказуемое): e. g. Jane began to put on her coat.

She could take her mother’s shopping bag.

Pete is going to be an engineer.

The Infinitive can be used as part of the Complex Subject Construction:

Complex Subject

e. g. She was seen to be leaving the house.

Видели, как (что) она выходила из дома.

e. g. He is known to have been one of the most popular writers of his time.

Известно, что он был одним из самых популярных писателей своего времени.

After the verbs “want”, “wish”, “expect”, “know” The Complex Object

Construction can be used:

Complex Object

e.g. I want you to translate the article as soon as possible.

Яхочу, чтобы вы перевели статью как можно скорее.

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The Infinitive without “to” is used in this construction after the verbs “see”, “feel”, “hear”, “observe”, “notice”, “make” (заставлять), “let”:

e. g. Ann saw him cross the street.

Аня видела, как он перешел улицу.

Ex. 1. State the syntactical function of the infinitives.

1.To stand up and leave the room now was out of the question.

2.It is a sweater to wear with a skirt or trousers.

3.I was the first to notice that.

4.The problem is complicated to solve it quickly.

5.I had nothing to suggest.

6.We are planning to take a long vacation this year.

7.It was not easy to understand how it could be stopped.

8.I hope you did not come to speak about it.

Ex. 2 Translate the sentences into Russian paying attention to the difference between Complex Subject and Complex Object constructions.

1.The delegation is known to arrive soon.

2.He is said to have been working here long.

3.I don’t consider him to be a good manager.

4.We expect interest rates to rise next week.

5.Firms are assumed to maximize their short run profits.

6.I know your colleagues to work hard.

7.The new method is believed to have given good results.

8.The company is said to be losing a lot of money.

9.The capitalist system is known to be based upon the principle of competition.

10.I know her to have graduated from the university three years ago.

11.The free market economy is said to be more flexible.

12.Consumers are assumed to be aware of all the goods and services they could buy.

13.Firms are supposed to know what quantity of each product they would sell.

14.The manager wanted his staff to be skilled.

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* * *

Read Text B and do the tasks given after it. Make up questions

on the text for your groupmates to answer. Use these answers for making up a summary of the text.

Text B

THE INCOME STATEMENT

The income statement reflects the results of operations over a period of time, typically one year. It summarizes all revenues (or sales), the amounts that have been or are to be received from customers for goods or services delivered to them, and all expenses, the costs that have arisen in generating revenues. It then subtracts expenses from revenues to show the actual profit or loss of a company, a figure known as net income - profit or the “bottom line”. Table 2 is an Income Statement for Sweet Dreams Ice Cream, Inc.

Revenues

The revenues of a business usually come from sales to customers, fees for services, or both. Other kinds of revenue include rents, commissions, interest, and money paid by other firms for the use of the company’s patents.

Two methods of recording revenues

In an ice-cream store like Sweet Dreams, the shopkeeper receives revenue the moment a customer hands over a dollar for a cone. But in a business that sells more expensive products - business computers, for example - a certain amount of time elapses between the moment the salesperson and the customer make a deal and the day the customer pays for the merchandise. At what point has the vendor actually made a sale? If a company records its sales on an accrual basis, the company puts the revenue on its books as soon as the deal is made and the product is delivered, even if the customer does not pay until the following year. If a business is run on a cash basis, the company records revenue only when money from sale is actually received.

Companies generally prefer to avoid the accrual method of recording revenue because it usually generates tax obligations before the cash has been collected. For businesses that have to borrow money just to pay their tax bills, the advantages of cash-based accounting are obvious. But accrual

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accounting benefits the government, because the Internal Revenue Service gets its tax money sooner.

Gross sales versus net sales

Gross sales, the total dollar amount of product sold, doesn’t give the entire revenue picture. In the normal course of business, deductions are made from gross sales, and these deductions may be considerable. For example, customers may return the goods they have bought and get full refunds. Cash discounts, offered to customers who pay early, also reduce gross sales. After such discounts are deducted from gross sales, the remaining amount is called net sales. Table 3 shows the impact of returns and discounts on Sweet Dreams’ gross sales.

Notes: 1. a cone - мороженое в вафельном или бумажном стаканчике

2.a vendor - торговец, продавец (ср. seller, salesman)

3.аccrual basis accounting - запись доходов и издержек в момент завершения операции

4.cash basis accounting - запись доходов и издержек на счетах только при поступлении и выплате (независимо от периода к которому они относятся)

I.From the following separate components try to make a correct sentence: because, generally, companies, before, tax, cash, has been collected,

usually, of, method, the, to avoid, obligation, the prefer, accrual, it, revenue, of, generates, recording.

II. Analyze Table 1. What period of financial activity does this Income Statement cover?

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