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Файл:Английский язык для бухгалтеров. Учебное пособие
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DISCUSSION POINTS
1. Which of the following is unlikely to be involved in any way
with accounting: business owner, salesman, wages clerk, personnel
manager, marketing director, inspector of taxes, treasurer of a tennis
club, housewife?
READING FOR DETAILS AND LANGUAGE STUDY: SECTION E
1. Read section E carefully to answer the following questions:
1. What are two branches of accounting which reflect the internal and
external users of accounting data?
2. What is the task of management accounting? Why is it so called?
3. What is the task of financial accounting? Why is it so called?
4. What criteria can be used as a basis for comparative analysis of
management and financial accounting?
5. Which of the two branches of accounting provide more accurate information and why?
6. Does management accounting focus on the whole organisation?
7. What is the difference between management and financial accounting from the standpoint of time dimension of the information provided?
8. Which of the two branches provides information more frequently?
Why?
2. Fill in the blanks using the words and phrases from the list in
the bottom.
Recording transactions is known as 1) ____________ because at one
time most accounts were kept in books. Reporting on the state of a business
by means of statements such as 2) __________ accounts and balance sheets
is known as 3) ___________ . Using accounts as an aid in controlling and
managing a business is known as 4) __________. The above activities together make up the subject matter of 5) ___________ .
The tasks, roles and boundaries of management accounting vary from
company to company. But, in general, it is simply the provision of information, interpretation and advice on all aspects of accounting and related data
which 6) __________ authorize and find useful.
a) financial accounting; b) book-keeping; c) management accounting;
d) accounting; e) top managers; f) profit and loss
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3. Mark the following statements as true (T) or false (F). Prove
your point of view:
Statements T F
1. The work of accountants is boring,
complicated and low-paid.
2. Recording transactions is known as
book-keeping because at one time most accounts were kept in books.
3. The main branches of accounting are
cost accounting and management accounting.
4. Using accounts as an aid in controlling
and managing a business is known as financial
accounting.
5. The main task of management accountants is to give management the information it
needs to make wise decisions.
6. Reporting on the state of a business by
means of statements such as profit and loss accounts and balance sheets is known as management accounting.
7. Accounting systems have particular roles
and contributions to make towards the more efficient and effective management of business enterprises operating in a market economy.
Word families:
Many words belong to word families (words with the same root and
their meaning is related). Leaning to recognize root words and understand
the relationship between different members of a family is one of the best
ways to improve your vocabulary and understanding of new words. If you
know just one word in a family, you will be able to work out the function
and meaning of many other members of that family.
4. Read the text about accepted accounting principles. Use the
word given in capitals at the end of each line to form a word that fits in
the space in the same line. There is an example at the beginning (0).
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ACCEPTED ACCOUNTING PRINCIPLES
With financial accounting, outside parties require assurance that the published annual 0) financial statements
are prepared in accordance with generally accepted accounting principles so that 1) ________ are possible. Consequently financial accounts must be prepared so as to
meet the 2) ________of the Companies Acts statements of
standard accounting practice. Outside users must normally
accept the information as the company provides it. In contrast, the management of an 3) _____ can use whatever
accounting rules it finds most 4) ______ for decisionmaking, without worrying whether it conforms to standards or 5) _____ requirements.
DISCUSSION POINTS
FINANCE
COMPARE
REQUIRE
ORGANISE
USELESS
ILLEGAL
1. Suppose you own the building and decorating business. Make a
list of different sorts of information that such a business will need to
record. E.g.
purchases of materials,
money received from customers,
wages paid to employees,
…………………………………………………
…………………………………………………
…………………………………………………
In each case say why this information should be recorded.
2. Is financial accounting of vital importance to your firm? Do
you want to know how successful you are? In what way can it be
shown? Are you the only one who will be interested in the results?
3. Think of some decisions you might have to make in managing
your business. Decisions you could mention include:
Should I purchase or lease the new equipment if needed?
Should I take on extra staff when demand is increasing?
Should I …………………………………………………
…………………………………………………………..
…………………………………………………………..
…………………………………………………………..
GLOSSARY
account n.
account v.
cчет, расчет, подсчет; отчет, отчетность; основа-
ние, причина
отчитываться, составлять, объяснять, являться
причиной
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adequate adv. соответствующий, достаточный, пригодный
advent a. наступление, приход
affairs a. дела
available adj. имеющийся в наличии, доступный
collate сравнивать, сопоставлять, детально сличать
confine v. ограничивать
conform v. согласоваться, соответствовать
consequences n. последствия
consistently adv. последовательно, согласованно
due n.
due a.
expenditure n. расход(ы), затрата, трата
extend v. простирать(ся), распространять, предоставлять
framework n. структура, система, основы, рамки
furnish v. снабжать, предоставлять
gist n. суть, сущность, главный пункт
informed a.
Inland Revenue n. внутренние поступления в государственную казну;
interest charges расходы по уплате процентов
inventory n. материально-производственные запасы
judge v. судить, оценивать, считать, полагать
livelihood a. труд, работа, средства к жизни
meaningful adj. разумный, значимый, выразительный
outcome n. результат
permit v.
receipts n. доходы
repay debts возвращать долги
review v. обозревать, осматривать, проверять, рецензировать
security n.
securities n.
sole proprietor n. частный предприниматель, единоличный владелец
stale a. несвежий, утративший новизну
thorough adj. тщательный, доскональный
trace back v. прослеживаться, восходить к определенному пе-
turnover n. товарооборот, оборот
unbiased a. беспристрастный
viability n. жизнеспособность, жизнестойкость
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должное; то, что причитается; налоги, членские
взносы, сборы; обязательства
надлежащий, должный, соответствующий, подлежащий выплате, причитающийся, срочный; обусловленный, обязанный; ожидаемый
информированный, осведомленный, обоснованный
департамент, ведающий внутренними налогами
разрешать, позволять, допускать
безопасность, надежность; гарантия; залог; защита;
поручитель
ценные бумаги
риоду в прошлом
U n i t 2
MANAGEMENT ACCOUNTING
BEFORE YOU READ
1. Do you know that the word ‘economics’ derives from a Greek
word meaning management of a household? If so, every housewife is a
manager. What techniques of management accounting do you think
she uses?
2. Decision making is important in all business. Is it enough for a
lucky businessman to have intuition to make the right decisions? Or
does he need to rely on financial information in decision-making process?
3. What personal qualities do you think a successful manager
should have got? What managerial traits would you like to possess?
READING FOR GIST
1. Skim the text about management accounting. Find an appropriate heading for each section (letters A – E):
1) the decision-making process;
2) tasks of management accounting;
3) the purpose of management accounting.
A
There is hardly any precise definition of management accounting. It is
simply what management accountants do. The tasks, roles and boundaries
of management accounting vary from company to company. In general,
management accounting is the provision of information, interpretation and
advice on all aspects of accounting and related data which top management
authorises and finds useful. Perhaps the main areas of controversy over the
role of management accounting relate to how far it should take responsibility and control of the enterprise’s total and integrated Management Information System, and how far the management accountant should go in having
authority to be proactive, going beyond a purely advisory role towards more
interventionist participation in management decision-making.
Historically, management accounting has evolved from cost accounting, but with cost accounting remaining a major subordinate component of
the management accounting process. Costs have been recorded, reported
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and controlled since the time of the Pharaohs. Until modern times however
‘costs’ usually meant simply ‘cash expenditures’.
Modern systems of cost accounting began to develop after the start of
the Industrial Revolution, when production processes became more complex, enterprises grew larger, and top management could no longer maintain
awareness and control of efficiency by personal observation. By the end of
the Second World War, cost accounting had become more sophisticated and
influential, and the term management accounting began to be used. Traditional cost accounting with its main function of controlling costs in factories, mines, railways, etc., and providing cost data to evaluate stocks, has
gradually evolved into management accounting with more intellectual role
of helping managers to plan, to evaluate alternative courses of action and
investment, and to reach optional decisions.
B
Because information produced by management accountants must be
judged in the light of its ultimate effect on the outcome of decisions, an understanding of accounting requires an understanding of the decision-making
process. Figure 2.1 presents a diagram of a decision-making model.
1. Identify objectives
2. Search for alternatives courses of action
3. Gather data about alternatives
Planning
process
4. Select alternative of action
5. Implement the decisions
6. Compare actual and planned outcomes
Control
process
7. Respond to divergencies from plan
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Figure 2.1. The decision-making planning and control process
The first five stages represent the decision-making or the planning
process. Planning is the process of formulating a course of action. It includes identifying objectives, finding alternative ways of accomplishing
objectives, gathering data about alternatives and deciding which alternative
is the best course of action. Selected alternative courses of action should be
implemented as part of the budgeting process. The budget is a financial
plan for implementing the various decisions that management has made.
The budgets for all of the various decisions are expressed in terms of cash
inflows and outflows, and sales revenues and expenses.
The final two stages represent the control process, which is the process
of seeing that plans are, in fact, carried out. In other words, do actions agree
with plans?
Let us now consider each of the elements of the decision-making and
control process.
Before good decisions can be made there must be some guiding aim
that will enable the decision-makers to assess the advantage of one course
of action over another. Hence the first stage in the decision-making proc-
ess should be to specify the objectives or goals of the organization. Objectives should answer a number of fundamental questions about the company’s future growth and development. For example:
1. What is the economic mission of the company?
2. What kind of business should the company be in?
3. What goods and services should be sold?
4. What markets should be served?
5. What share of market is desired?
6. What are the profit objective?
7. What rate of growth is required in sales, profits, assets and values
of equity shareholders’ investment?
Objectives therefore establish the direction in which the management
of the company wishes to be heading. There are three different types of objectives: the ‘mission’ of an organization, corporate objectives and unit objectives.
The mission of an organization describes in very general terms the
broad purpose and reason for an organization’s existence.
Corporate objectives relate to the organisation as a whole. They are
expressed in financial terms such as desired profits or sales levels, return on
capital employed, rates of growth or market share.
Unit objectives relate to the specific objectives of individual units
within the organisation, such as a division or one company within a holding
company.
The second stage in the decision-making model is a search for a
range of possible courses of action (or strategies) that might enable the
objectives to be achieved. Prior to developing strategies, it is necessary to
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undertake a strategic analysis to become better informed about the organization’s present strategic situation. This involves the following:
1. Analysing the environment in which an organization operates in
terms of nature and extent of uncertainty it faces.
2. Examining the resources that an organization possesses in order to
understand its strategic capability.
The formulation of strategy is concerned with matching the capabilities of an organization with its environment.
To maximize future cash flows, it is essential that management identifies potential opportunities and threats in its current environment and takes
specific steps immediately so that the organization will not be taken by surprise by any developments which may occur in the future. In particular, the
company should consider one or more of the following courses of action:
1) developing new products for sale in existing markets;
2) developing new products for new markets;
3) developing new markets for existing products.
The third stage in the decision-making process is gathering data
about alternatives. The alternative strategies should be examined to assess
their merits. The following criteria for judging the merits of strategies
should be established:
1. Suitability. For example, does the strategy fit in with the organization’s objective? Does the strategy exploit the company strengths and environmental opportunities, avoid the weaknesses and counter the environmental threats?
2. Feasibility. For example, can the necessary market position be
achieved? Can the company cope with the competitive reactions?
3. Acceptability. For example, will it be profitable? Is the level of risk
is acceptable.
Management should select those strategic options that have the great-
est potential for achieving the company’s objectives.
When the data has been gathered, management must decide which
courses of action to take. This is the forth stage in the decision making
process. When management has selected those courses of action that have
the greatest potential for achieving the company’s objectives, plans should
be created to implement the strategy. Plans can be based on long-run (strategic) decisions and short-term (operating) decisions. Long-run or strategic decisions have a profound effect on the firm’s future position and it is
therefore essential that adequate data is gathered about the firm’s capabilities and the environment in which it operates. Besides strategic or long-run
decisions, management must also make decisions which are based on the
environment of today, and the physical, human and financial resources presently available to the firm. Such decisions are known as short-term or oper-
ating decisions. Examples of short-term decisions include the following:
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1. What selling prices should be set for the firm’s products?
2. How many units should be produced of each product?
3. What media shall we use for advertising the firm’s products?
The plan must be financed and appropriate short-, medium- and long-
term finance will have to be raised before it can be implemented.
Once alternative courses of action have been selected, they should
be implemented as part of the budgeting process. This is the fifth stage in
the decision making process. The budget is a financial plan for implementing the various decisions that management has made. The budgets for all of
the various decisions are expressed in terms of cash inflows and outflows,
and sales revenues and expenses. These budgets are merged together into a
single unifying statement of the organization’s expectations for future periods. This statement is known as a master budget. The master budget consists of a budgeted profit and loss account, cash flow statement and balance
sheet. The budgeting process communicates to everyone in the organization
the part that they are expected to play in implementing management’s decisions.
The final stages in the process in Figure 1.2 of comparing actual
and planned outcomes and responses to divergencies from plan represent the firm’s control process.
To monitor performance, the accountant produces performance reports and presents them to the appropriate managers who are responsible
for implementing the various decisions. Performance reports consisting of a
comparison of actual outcomes (actual costs and revenues) and planned
outcomes (budgeted costs and revenues) should be issued at regular intervals. Performance reports provide feedback information by comparing
planned and actual outcomes. Effective control requires that corrective action is taken so that actual outcomes conform to planned outcomes. The
arrowed lines linking stages 7 and 5 and 7 and 2 represent “feedback
loops”. They signify that the process is dynamic and stress the interdependencies between the various stages in the process. The feedback loop between stages 7 and 2 indicates that the plans should be regularly reviewed.
The second loop stresses the corrective action taken so that actual outcomes
conform to planned outcomes.
C
The tasks of management accounting vary from enterprise to enterprise, according to the organisational structures and requirements set by top
management, but the following comprise the principal ones and closely parallel the tasks of management. A management accounting system should
generate information to meet the following requirements. It should:
1) allocate costs between cost of goods sold and inventories for inter-
nal and external profit reporting;
29
2) provide relevant information to help managers make better deci-
sions;
3) provide information for planning, control and performance meas-
urement.
Management accountants supply cost information needed by financial
accounting for preparing annual accounts and external reports. Financial
accounting rules require that accountants match costs with revenues to calculate profit. Consequently any unsold finished goods stock or partly completed stock (work in progress) will not be included in the cost of goods
sold, which is matched against sales revenue during a given period. Costs
are traced to each individual job or product, in order to allocate the costs
incurred during a period between costs of goods sold and inventories. This
information is required for meeting external financial accounting requirements, but most organizations also produce internal profit reports at
monthly intervals.
The second requirement of a management accounting system is to provide relevant financial information to managers to help them make better
decisions. This involves both routine and non-routine reporting. Routine
information is information on profitability of such segments of the business
as products, consumers and distribution channels. It is used for making resource allocation and pricing decisions. Non-routine information is required
for strategic decisions such as the development of new products, investments in new equipment and the negotiation of long-term sales contracts.
Management accounting systems should also provide information for
planning, control and performance measurement. Here the emphasis is on
integrating decisions into meaningful co-ordinated plans that provide timely
and accurate feedback information on the efficiency and effectiveness of
operations.
2. Read the text and transfer essential information from the text
into a chart in the form of your own notes. This activity will help you to
think carefully about the meaning of the text as you read it. It is also a
first step towards reformulating a text – that is, expressing the information contained in the text in a different form such as a summary, chart
or table.
Management Accounting
Origins Modernity Controversy Functions
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