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Файл:Английский язык для бухгалтеров. Учебное пособие
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ACTIVITIES
1. If you have understood the difference between capital and revenue expenditure, and capital and revenue receipts, you should be able
to calculate Judy Brooks's profit for the year to 31 December 1989
from the information which follows. Take care – some information has
been listed which is not needed.
Year ended 31 December 1989
£
Sales revenue – meals and drinks 20,000
Cost of food and drinks sold 7,000
Purchase of equipment 2,000
Rent and rates 500
Depreciation on fixed assets 500
Loan from bank 1,000
Additional finance invested by owner 4,000
Insurances 200
Waiters' wages 4,000
Drawings 2,000
Gas and electricity 800
2. Prepare a trading and profit and loss account from the following information relating to the business of Judy Brooks for the period
from Jan 1990 to 30 June 1990.
£
Sales of meals and drinks 16,000
Purchases of food and drinks 4,000
Returns outward 200
Stock of food and drink 1 Jan. 1990 400
Stock of food and drink 30 June 1990 600
Rent and rates 250
Depreciation on fixed assets 250
Insurance 100
Waiters' wages 3,000
Gas and electricity 500
3. The accounting records of Hendy Ltd. contained the following
balances as at 31 December 2004. Using these balances draft a balance
sheet and a profit and loss account for Hendy as at that date.
Debit Credit
£ £
Cash and bank balances 1000
Debtors 17 158
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Creditors 9538
Stocks 19 431
Fixed assets (at cost) 65 098
Fixed assets (accumulated depreciation) 16 751
Depreciation for year 6984
Bank overdraft 7423
Credit sales 89 649
Cash sales 57 053
Cost of goods sold 76 030
Operating costs 41 582
Loan repayable 31 December 19X2 10 000
Share capital 30 000
Retained profit as at 1 January 19XX 6869
4. Helen Berry started a retail business on 1 March 1999 with
£3,000 in the bank, furniture and fittings worth £3,000 and premises
valued at £15,000. She had borrowed £2,000 from Busifinance Ltd for
six months. Draft a balance sheet and open ledger accounts for all the
items in cluded. Enter the following transactions in the ledger, opening
new accounts where necessary.
1. March Purchased on credit £1,000 stock from Northern Foods and
£500 stock from AKJ.
2. March Sales for cash £50.
3. March Sales for cash £100.
4. March Paid £80 cash into bank.
5. March Returned £100 of goods to AKJ.
6. March Paid amount owing to Northern Foods by cheque less 2%
discount.
7. March Sold goods for £100 to N. Timms on credit.
8. March Paid insurance £25 by cheque.
9. 10 March Received £20 cash for letting the flat above the shop.
Note that you have to calculate the owner's capital on 1 March your-
self.
GLOSSARY
accounting period отчетный период
Accounts
Receivable
Accounts Payable
acquire v. получать, приобретать; овладевать
arise v. возникать, появляться; являться результатом
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счета к получению; счет дебиторов; дебиторская
задолженность; дебитор по расчету
счет кредитора
assist v. помогать, содействовать, способствовать
carry on v. продолжать; вести (дело)
circulation n. обращение
constitute v. составлять
deduct (from) v. вычитать, отнимать; удерживать; сбавлять
depreciation n. снижение стоимости, обесценивание; амортизация,
изнашивание
distinction n. различение, распознавание; выделение, разграни-
чение; отличие, различие
distinguish
(among/between/
проводить различие, находить отличия, различать,
распознавать (между чем-л.)
from) v.
diverse adj. многообразный, различный, разнообразный, раз-
ный; разнотипный
draw up v. составлять (документ)
enhancement n. увеличение, прирост, повышение; расширение,
повышение темпов роста
entity n. экономический объект, хозяйственное подразделе-
ние, организация
expire v. закончиться, истечь
gain v.
gains n.
получать, приобретать
доходы
gross profit валовая прибыль
hide v. прятать(ся); скрывать(ся)
highlight v. отводить главное место; выдвигать на первый план
insurance n. страхование
manufacturing
счет производственных издержек
account
note n. счет, вексель
ongoing ведущийся, действующий, проводящийся
outflows n. утечка; отлив
plan ahead v. планировать заранее
promise to pay обещание заплатить (содержание простого вексе-
ля); обещание произвести платеж
receipts n.
cash receipts
денежные поступления
кассовые поступления
receivables n. счета дебиторов
revenue n. доход
settlement n. решение; разрешение; соглашение, урегулирова-
ние; ликвидация; расчет; уплата
set up v. основывать, открывать (дело, предприятие и т.п.)
use up v. израсходовать, использовать; истратить
withdrawal n. изъятие
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U n i t 5
ACCOUNTING CONCEPTS
BEFORE YOU READ
1. What do you think rules are and why we need them?
2. Try to explain the following expressions:
a) rules are rules (SPOKEN);
b) work to rule (BRITISH);
c) golden rule.
Check your dictionary.
READING FOR GIST
1. Skim the text about accounting concepts. Find an appropriate
heading for each section (letters A – C).
boundary concepts
the need for accounting rules
measurement concepts
A
The contents of the balance sheet and the profit and loss account may
appear straightforward, but the process of their creation can be complex. As
a simple analogy, the game of football is basically very simple – score more
goals than the other team. However, the game of football must be circumscribed by rules if it is not to degenerate into total anarchy. There must be
rules regulating, for example, the number of players in each team, the number of goalkeepers allowed, and so on.
Without rules, the construction of financial statements would be similarly anarchic. Without rules covering the construction of financial statements, any that are drawn up would be quite meaningless. They would only
have meaning to the accountant who prepared them, as only he/she would
know the bases which had been used in their compilation.
Financial accounting seeks objectivity, and of course it must have
rules which lay down the way in which the activities of the business are
recorded. These rules are known as concepts.
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B
Boundary concepts are those concepts which define the parameters of
accounting.
Accounting periods.
For a person there is only one real time period – the time between that
person’s birth and death. Breaking time down into years, days, hours, and so
on, is quite artificial. We only do so because we find it useful, but there is
no real reason why a year should be 365 days or that one hour should be
60 minutes.
Similarly, the only natural choice of a time period for a firm would be
one which covered the whole life of that firm. In such a period, the accountant would be able to say clearly how well the firm had performed, but it
would be a very long time period to wait for such information. Owners, and
other interested parties, need to know about a firm’s performance regularly;
indeed it is highly unlikely that the Inland Revenue would be willing to wait
until the demise of a firm before it could assess it for tax.
The Companies Acts and tax law require limited liability companies to
prepare accounts every year, but there is no logical reason why this time
period should not be two years or 196 days, or anything else for other users.
Whatever time period is chosen, it will always be the result of arbitrary
choice and so must always be shown on the face of the accounts. Readers
will then know exactly what length of time is being evaluated.
Going concern.
The normal assumption is that a firm will not fail but will carry on
doing business indefinitely and that the annual accounts display only a slice
of an ongoing activity – rather like a clip from a film. All accounting concepts are based on this assumption and, as such, it is important to ensure
that the firm is, in fact, a going concern.
If the firm is not a going concern then the underlying assumption in
many accounting concepts will be invalid and revised concepts will have to
be applied.
Money measurement.
Financial statements only measure transactions which involve money.
It is a mistaken idea that such statements measure the company; they only
measure and can only measure, the financial status of the firm and the financial results of decisions made within it.
Companies, being essentially human organizations, have attributes
which cannot be quantified in monetary terms, for example, all firms have
workforces, and some have highly skilled workforces. Financial statements
will only show the financial consequences of the workforce (how much it
has been paid) for that is the only quantifiable and objective statement that
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can be made. There are no objective measures of skill, and even if there
were, it would still remain difficult to quantify that skill and compare it
with, for example, the cost of a new machine. It would seem likely that,
eventually the vital factor of placing a value on labour and management,
usually known as human asset accounting, will play a full part in the construction of balance sheets.
Relevance (or materiality).
The financial records of large firms can contain a whole plethora of financial information, most of which will involve relatively small sums. The
relevance rule means that time, and money, should only be expended on
those items which are sufficiently large as to make the cost of extracting or
analysing those figures worthwhile.
Determining which figures are relevant and which are not will require
a degree of subjectivity by the accountant, but it will appear reasonable if
extremes are considered. For example, in valuing the stock of a pub, the
value ascribed to the stock of beer is obviously relevant whereas the value
of the publican’s stock of paperclips is not.
Consistency.
The consistency concept requires firms to adopt specific interpretations of the basic rules and apply them consistently, year after year, unless
there are good reasons why a revised interpretation should be followed.
The reason for this concept is simply that if a firm’s financial performance is to be comparable year on year, then the underlying bases of each
year’s accounts must be similar. If they are not, then no legitimate comparison can be made between years, as such a comparison would not be on a
‘like with like’ basis.
C
Measurement concepts are those which define the level of income or
expenditure.
Cost basis.
Given that transactions have to be objectively measured in monetary
terms, it follows that the measurement must be in terms of historic cost.
Any other basis, such as value, would involve subjectivity – the only true
objective measure is historic cost.
Attempts have been made in the past to produce accounts which use a
basis other than cost, usually in an attempt to remove the distorting effects
of inflation. However, there has never been a genuine consensus on what
the revised basis should be and such innovations have largely fallen by the
wayside.
Matching.
The matching concept in the accounting reads:
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Revenues must be assigned to the accounting period in which the
goods were sold or the services performed, and expenses must be assigned
to the accounting period in which they were used to produce revenues.
Though direct cause-and-effect relationships can seldom be demonstrated for certain, many costs appear to be related to particular revenue.
The accountant will recognize such expenses and related revenue in the
same accounting period. Examples are the costs of goods sold and sales
commissions. When there is no direct means of connecting cause and effect,
the accountant tries to allocate costs in a systematic and rational way among
the accounting periods that benefit from the cost. For example, a building is
converted from an asset to an expense by allocating its use.
The accrual accounting.
To apply the matching concept stated above, accountants have developed accrual accounting. Accrual accounting “attempts to record the financial effects on an enterprise of transactions and other events and circumstances in the periods in which those transactions, events, and circumstances
occur rather than only in the periods in which cash is received or paid by the
enterprise”. In other words, accrual accounting consists of all the techniques
developed by accountants to apply the matching rule. It is done in two general ways:
− by recognizing revenues when earned and expenses when incurred
and;
− by adjusting the accounts.
Adjusting the Accounts. An accounting period by definition must end
on a particular day. On that day, the balance sheet must contain all assets
and liabilities as of the end of that day. The income statement must contain
all revenues and expenses applicable to the period ending on that day. Although a business is recognized as a continuous process, there must be a
cutoff point. Some transactions invariably span the cutoff point, and as a
result some of the accounts need adjustment.
Prudence.
Accountants are frequently seen as tight-fisted, conservative individuals who always see the negative side of life. This may be the result of applying the prudence rule so often. This rule basically urges accountants to be
cautious when preparing financial statements and, if faced with a choice, to
choose the option which minimizes profit. It is seen to be better to be
slightly pessimistic than to be disappointingly optimistic.
The application of this concept is seen in many accounting axioms
such as:
− ‘recognize losses when they become apparent but profits only
when they are realized’ – that is, prepare for the worst and do not count
your chickens until they are hatched;
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− ‘lower of cost and net realizable value’ – that is, if a firm has stock
which cost £1,000 but whose resale value is £800, abandon the cost basis
rule and choose the lower value; if, however, the resale value is £1,200, stay
with cost basis rule.
Dual aspect.
This concept does no more than state the obvious fact that every transaction made by a firm affects that firm in two ways. Thus if a firm pays out
money, it must also have received something in return; or if it receives money, it must also have either sold something or have borrowed the money.
The importance of this concept lies in the fact that it forms the basis of
the financial recording systems of every large firm irrespective of whether
the system is the old manual method or computerized.
READING FOR SPECIFIC INFORMATION
1. Scan the text and write the number of the letter of the section
where you can find the following information. Do it as quickly as possible.
___ an accounting period by definition
___ the process of creation of financial statements
___ a cutoff point
___ financial consequences of the workforce
___ accrual accounting
___ the dual aspect concept
___ adjusting the accounts
___ relevance rule
___ historic cost
___ human asset accounting
___ accounting axioms
___ objectivity of financial accounting
___ parameters of accounting
READING FOR DETAILS AND LANGUAGE STUDY:
SECTIONS A AND B
1. Check that you understand the detailed questions below and
answer them.
1. Why does financial accounting need rules?
2. What are boundary concepts?
3. How often do the Companies Acts and tax law require limited li-
ability companies to prepare accounts?
4. Why should the accounting period be shown on the face of the ac-
count?
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5. Comment on the going concern accounting concept.
6. What do the financial statements measure?
7. Are there objective measures of workforces of companies?
8. What does human asset accounting imply?
9. What does the relevance rule mean?
10. What does the consistency concept require?
2. Scan Sections A and B and find English equivalents of the fol-
lowing Russian word combinations.
A B
1) принцип работающего предприятия
2) принцип существенности
3) отчетный период
4) принцип денежного выражения
5) принцип постоянства
6) граничные принципы
7) составлять отчет
8) прекращение деятельности фирмы
9) результат произвольного выбора
10) закон о предприятиях
11) лежащие в основе бухгалтерских принципов
допущения
12) определять пределы (границы)
13) обоснованные причины
14) изменения в толкованиях принципов
15) учет человеческого капитала
16) оценка трудовых и управленческих ресурсов
3. Find the words or phrases which mean the same as a) – h):
a) to limit something such as power, rights, or opportunities (A);
b) to state officially what someone must do or how they must do it (A);
c) without a clear meaning (A);
d) to use time, energy, money etc doing something (B/relevance);
e) made by people and used instead of something natural; used or created as a result of human influence or action (B/accounting period);
f) fair and reasonable; allowed by the law or correct according to the
law (B/consistency);
g) the total number of people who work in a particular company, industry, or area (B/money measurement);
h) the limits of an activity or experience (B/line 1).
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4. Complete the sentences below by choosing the best word from
exercise 3.
1. The Government is encouraging women back into the _________ .
2. Are the premises being used for _________ business purposes?
Did he have a ___________ excuse for being late?
3. Our new policies are designed to break down _______ barriers to
women's advancement.
4. Armstrong was the company president, though his powers were
________ .
5. Did you ____________ all your energy on such a useless job?
6. The symbols are apparently ____________ .
7. The regulations ___ ___ that members must always sign guests in.
8. Electronic information knows no ___________ .
5. Match a line in A with a line in B to define the following terms
A B
1) Materiality
2) Accounting
period
3) Consistency
4) Going concern
5) Money
measurement
a) The period of time spanning the date between two consecutive balance sheets and to
which the profit and loss account relates (for
companies it is normally twelve calendar
months).
b) The rule according to which accounting is
only concerned with those facts that can be
measured in monetary terms with a fair degree
of objectivity.
c) An accounting concept recognizing that accounts cannot report with complete accuracy
every minute detail of an enterprise’s affairs on
the grounds of practicality and of limited potential benefits to the readers of the accounts.
d) An assumption that an enterprise will continue in existence throughout foreseeable future
and that there is no necessity to reflect liquidation values in the accounts.
e) The fundamental accounting concept which
states that when a firm has once fixed a method
of the accounting treatment of an item it will
enter all similar items that follow in exactly the
same way.
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