- На начальном этапе существования фирмы ее владельцу требуются советы, помощь и поддержка компетентных лиц.

- Начинающему предпринимателю необходима юридическая, экономическая, бухгалтерская и др. помощь.

- Юрист окажет помощь в делах, связанных с заключением контракта, оформления ссуд, защитой ответственности и др.

- Недорогие услуги по исследованию рынка помогут определить места для размещения того или иного товара (услуги).

- Агент по страхованию поведает о возможных рисках малого предприятия и даст рекомендации относительно того, как от этих рисков застраховаться.

- Агент по займу поможет составить бизнес-план и порекомендует, как лучше оформить заем в том или ином случае.

Small business and the law

Understanding business law takes many years. No one expects a small business owner to get a law degree or to have a complete understanding of legal concepts related to business ownership and operation- Because you will deal with numerous people, products and companies, you should be aware of your rights and responsibilities. Common sense and caution are essential in business. A general understanding of business law and insurance go hand in hand with good business management

Contracts. Agreements which a business owner makes in the course of carrying on a business may be called contracts. A contract is a legal agreement between two or more parties in which each has rights and obligations. Contracts may be enforced by the courts if they meet certain requirements. A contract must have the following characteristics to be legal: mutual agreement, consideration, form, competency and legal subject matter.

Since contracts can be enforced by law, it is important that people understand them. When an individual fails to honour a contract, the other parties to the contract can legally require that the contract be fulfilled or a satisfactory remedy be provided.

For an agreement to be mutual there must be a clear, definite, and serious offer and an unqualified acceptance. If there is to be mutual agreement, there is no need for a true meeting of the minds. This means that the parties involved need not to be thinking of the same thing. If a merchant offers to sell some goods for $55 and a customer accepts the offer, it does not really matter that the merchant intended to say $75. There is a binding contract at $55 if the party can prove the offer was made and accepted. This can be done by producing witnesses and documents. The subject matter of a contract must be stated in definite terms.

Parties to a contract must receive something of value and give something of value in return. This something of value is called consideration. The consideration may be cash, goods or a service, or it may even be a particular action.

A contract is made if there is an offer and acceptance, consideration, competent parties, and legal subject matter. The contract may be written or oral. A contract for the sale or transfer of land or real property must be in writing. Contracts which take more than one year to perform usually must be in writing. This includes leases of more than one year.

A competent party is one who has legal capacity to enter into a contract. A person must be of legal age and sane in order to be considered competent.

The lease. Because of the greater capital required to own real property, most small business owners start out by renting or leasing business space. When an owner decides to rent, an agreement is made with the landlord specifying the amount of rent to be paid and other conditions. The conditions agreed upon, when put into written form and signed by tenant and landlord, make up the lease.

A lease is a contract to rent land and/or buildings for a speci­fied time for a consideration. A lease is usually written and states the tenant's rights and obligations. A written lease is common business practice.

The lease usually states the term of the tenancy in months or years. However, sometimes in unwritten agreements nothing is said about the length of time the property is to be rented to the tenant. This type of tenancy is known as tenancy at will. When the landlord wants the tenant to move, 30 days written notice must be given. The tenant, on the other hand, does not have to give the landlord any notice.

The length of the lease is an important consideration. You may not want a long lease, especially if your business is not successful. On the other hand, an owner does not want an increase in rent if the busi­ness does well. It may be desirable to have a short-term lease with the option of renewing at the same rent. This is known as an optional term lease.

Leases may be classified according to the matter in which rent is paid. The term lease is a popular type of lease. It states the amount of rent to be paid for a specified time. Other types give the landlord a percentage of business income instead of a rent. This is called a percentage lease. Sometimes the rental agreement is a combination of the term lease and the percentage lease. With this agreement, the landlord receives a fixed rent in addition to a percentage of business income.

Exercises

1. Answer the questions based on the text.

1. What legal agreements are known to you?

2. What characteristics must a contract have to be legal?

3. What is consideration?

4. What is the procedure to conclude a contract?

5. When is the lease made up?

6. What types of lease are outlined in the text?

7. Why should an entrepreneur be aware of your rights and responsibilities?

8. What characteristics must a contract have to be considered legal?

9. The subject matter of a contract must be stated in definite terms, mustn’t it?

10. Must the contracts which take more than one year to perform usually be in writing?

2. Find the equivalents

взаимный	court
продавец	consideration
важный	mutual
понятие	to fulfil
собственность	desirable
суд	capacity
выполнять	notice
желаемый	merchant
способность	property
уведомление	important

3. Make up sentences with the following word-combinations

- rental agreement

- popular type of lease

- in addition to

- to be signed by

- mutual agreement

- to go hand in hand with

- to enter into a contract

- rights and responsibilities

4.Translate the following sentences into English

- Предпринимателю следует иметь представление об основных правах и обязанностях, поскольку ему придется иметь дело с большим количеством физических и юридических лиц.

- Здравый смысл и осторожность необходимы в любом бизнесе.

- Контракт – законное соглашение между, как правило, двумя сторонами, в котором прописываются права и обязательства согласующихся сторон.

- Законный контракт имеет следующие характеристики: определенная форма, взаимное согласие, компетентность и законный предмет договора.

- Если одна из сторон отказывается выполнять условия договора, то другие стороны могут на законных основаниях потребовать выполнение положений договора или предоставить удовлетворительную замену.

- Предмет договора должен быть определен четко и ясно.

- В связи с тем, что начинание бизнеса сопряжено с крупным расходованием денежных средств, большинство предпринимателей арендуют площади для ведения деятельности.

Taxes

A tax may be defined as a pecuniary burden laid upon individuals or property to support the government, a payment exacted by legislative authority. A tax is not a voluntary payment or donation, but an enforced contribution, exacted pursuant to legislative authority and is any contribution imposed by government whether under the name of import, duty, custom, excise, subsidy, aid, supply, or other name.

In modern taxation systems, taxes are levied in money, but in-kind and corvée taxation are characteristic of traditional or pre-capitalist states and their functional equivalents. The method of taxation and the government expenditure of taxes raised is often highly debated in politics and economics. Tax collection is performed by a government agency.

Funds provided by taxation have been used by states and their functional equivalents throughout history to carry out many functions. Some of these include expenditures on war, the enforcement of law and public order, protection of property, economic infrastructure (roads, legal tender, enforcement of contracts, etc.), public works, social engineering, and the operation of government itself. Governments also use taxes to fund welfare and public services. These services can include education systems, health care systems, pensions for the elderly, unemployment benefits, and public transportation. Energy, water and waste management systems are also common public utilities. Colonial and modernizing states have also used cash taxes to draw or force reluctant subsistence producers into cash economies.

Governments use different kinds of taxes and vary the tax rates. This is done to distribute the tax burden among individuals or classes of the population involved in taxable activities, such as business, or to redistribute resources between individuals or classes in the population. Historically, the nobility were supported by taxes on the poor; modern social security systems are intended to support the poor, the disabled, or the retired by taxes on those who are still working. In addition, taxes are applied to fund foreign and military aid, to influence the macroeconomic performance of the economy (the government's strategy for doing this is called its fiscal policy - see also tax exemption), or to modify patterns of consumption or employment within an economy, by making some classes of transaction more or less attractive.

A nation's tax system is often a reflection of its communal values or the values of those in power. To create a system of taxation, a nation must make choices regarding the distribution of the tax burden—who will pay taxes and how much they will pay—and how the taxes collected will be spent. In democratic nations where the public elects those in charge of establishing the tax system, these choices reflect the type of community that the public wishes to create. In countries where the public does not have a significant amount of influence over the system of taxation, that system may be more of a reflection on the values of those in power.

The resource collected from the public through taxation is always greater than the amount which can be used by the government. The difference is called compliance cost, and includes for example the labour cost and other expenses incurred in complying with tax laws and rules. The collection of a tax in order to spend it on a specified purpose, for example collecting a tax on alcohol to pay directly for alcoholism rehabilitation centres, is called hypothecation. This practice is often disliked by finance ministers, since it reduces their freedom of action. Some economic theorists consider the concept to be intellectually dishonest since (in reality) money is fungible. Furthermore, it often happens that taxes or excises initially levied to fund some specific government programs are then later diverted to the government general fund. In some cases, such taxes are collected in fundamentally inefficient ways, for example highway tolls.

Some economists, especially neo-classical economists, argue that all taxation creates market distortion and results in economic inefficiency. They have therefore sought to identify the kind of tax system that would minimize this distortion. Also, one of every government's most fundamental duties is to administer possession and use of land in the geographic area over which it is sovereign, and it is considered economically efficient for government to recover for public purposes the additional value it creates by providing this unique service.

Since governments also resolve commercial disputes, especially in countries with common law, similar arguments are sometimes used to justify a sales tax or value added tax. Others (e.g. libertarians) argue that most or all forms of taxes are immoral due to their involuntary (and therefore eventually coercive/violent) nature. The most extreme anti-tax view is anarcho-capitalism, in which the provision of all social services should be voluntarily bought by the person(s) using them.

Taxation has four main purposes or effects: Revenue, Redistribution, Repricing, and Representation.

The main purpose is revenue: taxes raise money to spend on roads, schools and hospitals, and on more indirect government functions like market regulation or legal systems. This is the most widely known function.

A second is redistribution. Normally, this means transferring wealth from the richer sections of society to poorer sections.

A third purpose of taxation is repricing. Taxes are levied to address externalities: tobacco is taxed, for example, to discourage smoking, and many people advocate policies such as implementing a carbon tax.

A fourth, consequential effect of taxation in its historical setting has been representation. The American revolutionary slogan "no taxation without representation" implied this: rulers tax citizens, and citizens demand accountability from their rulers as the other part of this bargain. Several studies have shown that direct taxation (such as income taxes) generates the greatest degree of accountability and better governance, while indirect taxation tends to have smaller effects.

Exercises

1. Answer the questions based on the text.

1. How can a tax may be defined?

2. A tax is an enforced contribution, exacted pursuant to legislative authority and is any contribution imposed by government, isn’t it?

3. Is the method of taxation and the government expenditure of taxes often highly debated in politics and economics?

4. What are the funds provided by taxation used by states for?

5. Do governments use different kinds of taxes and vary the tax rates?

6. In what way do the governments distribute the tax burden among individuals?

7. Are the taxes applied to fund foreign and military aid and to influence the macroeconomic performance of the economy?

8. Do you agree that the resource collected from the public through taxation is always greater than the amount which can be used by the government?

9. What taxes are collected in fundamentally inefficient ways, for example highway tolls?

10. Why do the economists think that all taxation creates market distortion and results in economic inefficiency?

11. What is one of the government's most fundamental duties?

12. What four main purposes or effects does taxation have?

13. Can you argue that most or all forms of taxes are immoral?

14. What is the money raised by taxes used for?

15. What is a consequential effect of taxation?

2. Find the equivalents

гражданин	indirect taxation
косвенный налог	customs
таможня	citizen
извлечение	voluntarily
отражение	externality
расходы	to recover
акциз	distortion
перевод	compliance
крайность	excise
благосостояние	redistribution
покрывать	reflection
разрушение	welfare
перераспределение	transferring
сочетание	exemption
свободный	expenditure

3. Make up sentences with the following word-combinations

- to support the government

- the government expenditure

- throughout history

- to distribute the tax burden

- to minimize the distortion

- consequential effect of taxation

- the greatest degree of accountability

4.Translate the following sentences into English

- Налог может быть определен как денежное обременение, возлагаемое на частное лицо или собственность, законно изымаемое уполномоченным государственным органом для поддержания государственных расходов.

- Налог не является добровольным пожертвованием, это вынужденная пошлина, насаждаемая государством.

- В современных развитых странах налог определяется в виде денежной суммы; товарный налог существует в странах с отсталой докапиталистической экономикой.

- Фонды, образуемые за счет налоговых поступлений, расходуются государством во многих направлениях: разработка законов, проведение военных действий, защита окружающей среды, охрана здоровья, развитие экономической инфраструктуры и т.д.

- Разные государства используют разные виды налогов и определяют различные налоговые ставки.

- Для того чтобы разработать систему налогообложения, необходимо определиться относительно распределения налогового бремени: кто и как будет платить налог и как собранные средства будут распределяться.

- Налогообложение имеет четыре основные цели: доход, перераспределение, переоценивание, утверждение.

Classes of taxes.

Taxes are most commonly classified as either direct or indirect, an example of the former type being the in­come tax (inheritance tax, real estate tax) and of the latter the sales tax (value-added tax, excise tax).

Taxes are sometimes referred to as direct tax or indirect tax. The meaning of these terms can vary in different contexts, which can sometimes lead to confusion. In economics, direct taxes refer to those taxes that are collected from the people or organizations on whom they are ostensibly imposed. For example, income taxes are collected from the person who earns the income. By contrast, indirect taxes are collected from someone other than the person ostensibly responsible for paying the taxes. In law, the terms may have different meanings. In U.S. constitutional law, for instance, direct taxes refer to poll taxes and property taxes, which are based on simple existence or ownership. Indirect taxes are imposed on rights, privileges, and activities. Thus, a tax on the sale of property would be considered an indirect tax, whereas the tax on simply owning the property itself would be a direct tax. The distinction can be subtle between direct and indirect taxation, but can be important under the law.

Direct taxes are taxes persons; they are aimed at the individual's ability to pay as measured by his income or his net wealth. Income taxes are lev­ied on total personal net income in excess of some stipulated minimum. They are also adjusted to take into account the cir­cumstances influencing the ability to pay of the individual, such as family status, number and age of children, and financial bur­dens resulting from illness.

Income taxes are often levied at graduated rates, that is, at rates that rise as income rises. Inheri­tance taxes are taxes on the money or property that you give to someone, else after you die. Real estate taxes are taxes imposed upon immovable property consisting of land, any natural re­sources, and buildings. Indirect taxation is a system of collect­ing taxes by adding an amount to the price of goods and ser­vices that people buy.

Sales tax is a tax that you have to pay in addition to the cost of something you are buying. Value-added taxes are taxes on the rise in value of a product at each stage of manufacture and marketing. Sales tax levied on the manufac­ture, purchase, sale, or consumption of a specific commodity is known as an excise tax.

An important feature of tax systems is the percentage of the tax burden as it relates to income or consumption. The terms progressive, regressive, and proportional are used to describe the way the rate progresses from low to high, from high to low, or proportionally. The terms describe a distribution effect, which can be applied to any type of tax system (income or consumption) that meets the definition. A progressive tax is a tax imposed so that the effective tax rate increases as the amount to which the rate is applied increases. The opposite of a progressive tax is a regressive tax, where the effective tax rate decreases as the amount to which the rate is applied increases. In between is a proportional tax, where the effective tax rate is fixed, while the amount to which the rate is applied increases. The terms can also be used to apply meaning to the taxation of select consumption, such as a tax on luxury goods and the exemption of basic necessities may be described as having progressive effects as it increases a tax burden on high end consumption and decreases a tax burden on low end consumption.

Exercises

1. Answer the questions based on the text.

1. How are taxes classified?

2. What direct taxes are mentioned in the text?

3. What are indirect taxes?

4. What income taxes are levied on?

5. What rates are income taxes levied at?

6. What is meant by the term “real estate tax”?

7. What is indirect taxation?

8. What do you know about “sales tax”?

9. What can you say about excise tax?

10. Who are the income taxes collected from?

2. Find the equivalents

налог на добавленную стоимость	income tax
чистый	in excess of
сверх	inheritance tax
налог с оборота	rate
акцизный налог	real estate tax
налог на недвижимость	consumption
взимать	value-added tax
потребление	net
обусловливать	to levy
прогрессивный подоходный налог	sales tax
подоходный налог	ability to pay
ставка	impose
платёжеспособность	stipulate adjust
налог на наследство	excise tax
облагать	graduated income tax

3. Make up sentences with the following word-combinations

- direct and indirect taxation

- to be collected from

- luxury goods

- to apply meaning

- to increase a tax burden

- to be lev­ied on

- to be imposed on

4.Translate the following sentences into English

- Налоги подразделяются на две большие группы: прямые и косвенные.

- Прямые налоги определяются согласно размеру дохода того или иного лица, вносящего налог.

- Ставка подоходного налога увеличивается с ростом дохода.

- Налог на наследство – это налог, который оплачивается с денег или иной собственности, получаемой в наследство.

- Налог на имущество – это налог, насаждаемый на имущество, такое как земля, природные ресурсы, строения.

- Косвенное налогообложение – это система сбора налогов посредством добавления определенной суммы к стоимости приобретаемых товаров и услуг.

- Акцизный налог – это налог, определяемый на производство, покупку, продажу или потребление определенного товара.

Cash flow and the bank

A small firm should probably deal with a small bank and a large firm with a large bank. A large bank may not give a small firm the time and attention that a sfl bank might. That is why the least expensive (and often the best) consultant a small I firm can find is often a local banker. If the banker is skilled in accounting and finance, he or she can provide all kinds of tree financial advice. To as sure that M advice comes regularly, a small-business person might visit the banker periodical as often as once a month. By keeping a skilled banker informed about sales, profits and cash flow, a small-business person makes sure of good financial advice and a more ready source of funds. Bankers, investment advisers, finance people, and a host of other businesspeople use the data from income statements and balance sheets to evaluate the health of firms and compare them to others.

We shall discuss the ratios they use in the appendix to this chapter. If you know what banks arc looking for, you can plan your budget such that the bank will be quite willing to lend you money. If you don't understand the ratios that hanks look at, you could easily go bankrupt and never quite understand what happened.

Bank system

A bank is a financial organization licensed by a government. Its primary activities include providing financial services to customers while enriching its investors. Many financial activities were allowed over time. For example banks are important players in financial markets and offer financial services such as investment funds. In some countries such as Germany, banks have historically owned major stakes in industrial corporations while in other countries such as the United States banks are prohibited from owning non-financial companies.

In Japan, banks are usually the nexus of a cross-share holding entity known as the keiretsu. In France, bank assurance is prevalent, as most banks offer insurance services (and now real estate services) to their clients. The level of government regulation of the banking industry varies widely, with countries such as Iceland, having relatively light regulation of the banking sector, and countries such as China having a wide variety of regulations but no systematic process that can be followed typical of a communist system. Banks act as payment agents by conducting checking or current accounts for customers, paying cheques drawn by customers on the bank, and collecting cheques deposited to customers' current accounts.

Banks also enable customer payments via other payment methods such as telegraphic transfer, EFTPOS, and ATM. Banks borrow money by accepting funds deposited on current accounts, by accepting term deposits, and by issuing debt securities such as banknotes and bonds. Banks lend money by making advances to customers on current accounts, by making installment loans, and by investing in marketable debt securities and other forms of money lending. Banks provide almost all payment services, and a bank account is considered indispensable by most businesses, individuals and governments. Non-banks that provide payment services such as remittance companies are not normally considered an adequate substitute for having a bank account.

Banks borrow most funds from households and non-financial businesses, and lend most funds to households and non-financial businesses, but non-bank lenders provide a significant and in many cases adequate substitute for bank loans, and money market funds, cash management trusts and other non-bank financial institutions in many cases provide an adequate substitute to banks for lending savings to.

Bank statements are accounting records produced by banks under the various accounting standards of the world. Under GAAPandIFRSthere are two kinds of accounts: debit and credit. Credit accounts are Revenue, Equity and Liabilities. Debit Accounts are Assets and Expenses. This means you credit acredit account to increase its balance, and you debit a debit account to decrease its balance.

This also means you debit your savings account every time you deposit money into payment it (and the account is normally in deficit), while you credit your credit card account every time you spend money from it (and the account is normally in credit).

However, if you read your bank statement, it will say the opposite—that you credit your account when you deposit money, and you debit it when you withdraw funds. If you have cash in your account, you have a positive (or credit) balance; if you are overdrawn, you have a negative (or deficit) balance.

The reason for this is that the bank, and not you, has produced the bank statement. Your savings might be your assets, but the bank's liability, so they are credit accounts (which should have a positive balance). Conversely, your loans are your liabilities but the bank's assets, so they are debit accounts (which should also have a positive balance).

Where bank transactions, balances, credits and debits are discussed below, they are done so from the viewpoint of the account holder—which is traditionally what most people are used to seeing.

Exercises

1. Answer the questions based on the text.

1. Why should a small firm deal with a small bank and a large firm with a large bank?

2. Can a banker provide all kinds of tree financial advice?

3. In what case is a bank willing to lend money?

4. Does the level of government regulation of the banking industry vary widely from country to country?

5. Banks act as payment agents by conducting checking or current accounts for customers, don`t they?

6. What is a financial organization licensed by a government?

7. What kinds of payment services do banks provide?

8. What do the banks borrow money from?

9. Do you debit or credit your savings account every time you deposit money into a bank?

10. Are a man`s loans regarded as his liabilities but the bank's assets?

2. Find the equivalents

точка зрения	expensive
активы	to discuss
пересылка	negative
наоборот	financial advice
совет по финансовым вопросам	viewpoint
отрицательный	assets
обсуждать	conversely
дорогостоящий	to enrich
обогащать	remittance

3. Make up sentences with the following word-combinations

- to read a bank statement

- to deposit money

- non-financial businesses

- current accounts

- to provide a significant and adequate substitute for bank loans

- to be prohibited from

- financial services

- to be looking for

4.Translate the following sentences into English

- Как показывает практика, малый бизнес обслуживается мелкими банками, крупный – крупными.

- Банкиры, инвесторы и другие представители делового мира используют информацию, полученную из отчетов о прибылях и убытках и балансовых отчетов, для того, чтобы определить финансовое благополучие предприятия.

- Банк – это финансовое учреждение, имеющее государственную лицензию.

- Банки предоставляют разного рода финансовые услуги населению.

- Банки выступают платежными агентами, обслуживающими расчетные и текущие счета клиентов.

- Банки привлекают средства, размещая их на текущих счетах, открывая срочные вклады и учреждая банковские долговые обязательства, такие как банковские расписки и акции.

- Банки выплачивают деньги, начисляя проценты по вкладам клиентов, выдавая кредиты и заемы, вкладывая средства в рыночные ценные бумаги.

- Согласно Международным Стандартам Финансовой Отчетности (МСФО) и Общепринятым Стандартам Бухгалтерской Отчетности (ГААП), существует два вида счетов: дебет и кредит.

- Клиент дебитует средства каждый раз, когда пополняет свой текущий счет.

- Клиент кредитует средства каждый раз, когда расходует деньги со счетов.

- Если у клиента имеются средства на счете, то его баланс считается положительным, если клиент вышел за пределы своих средств, баланс отрицательный.

The role and functions of banks

The commercial role of banks is not limited to banking, and includes:

• issue of banknotes(promissory notesissued by a banker and payable to bearer on demand)

• processing of payments by way of telegraphic transfer, EFTPOS, internet banking or other means

• issuing bank draftsandbank cheques

• accepting money on term deposit

• lending money by way of overdraft, installment loan or otherwise

• providing documentary and standby letters of credit(trade finance), guarantees,performance bonds, securities underwriting commitments and other forms of off-balance sheet exposures

• safekeeping of documents and other items in safe deposit boxes

• currency exchange

• acting as a 'financial supermarket' for the sale, distribution or brokerage, with or without advice, of insurance, unit trusts and similar financial products

The economic functions of banks include:

1. issue of money, in the form of banknotesand current accounts subject tochequeor payment at the customer's order. These claims on banks can act as money because they are negotiable and/or repayable on demand, and hence valued at par. They are effectively transferable by mere delivery, in the case ofbanknotes, or by drawing a cheque that the payee may bank or cash.

2. netting and settlement of payments – banks act as both collection and paying agents for customers, participating in interbank clearing and settlement systems to collect, present, be presented with, and pay payment instruments. This enables banks to economise on reserves held for settlement of payments, since inward and outward payments offset each other. It also enables the offsetting of payment flows between geographical areas, reducing the cost of settlement between them.

3. credit intermediation – banks borrow and lend back-to-back on their own account as middle men.

4. credit quality improvement – banks lend money to ordinary commercial and personal borrowers (ordinary credit quality), but are high quality borrowers. The improvement comes from diversification of the bank's assets and capital which provides a buffer to absorb losses without defaulting on its obligations. However, banknotes and deposits are generally unsecured; if the bank gets into difficulty and pledges assets as security, to raise the funding it needs to continue to operate, this puts the note holders and depositors in an economically subordinated position.

5. maturity transformation– banks borrow more on demand debt and short term debt, but provide more long term loans. In other words, they borrow short and lend long. With a stronger credit quality than most other borrowers, banks can do this by aggregating issues (e.g. accepting deposits and issuing banknotes) and redemptions (e.g. withdrawals and redemptions of banknotes), maintaining reserves of cash, investing in marketable securities that can be readily converted to cash if needed, and raising replacement funding as needed from various sources (e.g. wholesale cash markets and securities markets).

Exercises

1. Answer the questions based on the text.

1. What is a commercial role of banks?

2. What are the economic functions of banks?

3. What actions of a bank can put the note holders and depositors in an economically subordinated position?

4. What do the banks aggregate issues for?

5. In what ways do the banks lend money?

6. Can you explain the way banks make money?

7. Do banks act as 'financial supermarkets'?

2. Find the equivalents

безопасность	source
вкладчик	negotiable
чек	security
совет	improvement
спрос	demand
долг	draft
улучшение	depositor
проходимый	debt
источник	advice

3. Make up sentences with the following word-combinations

- to invest in marketable securities

- to economize on reserves

- bank's assets

- to be limited to

- issue of banknotes

- on term deposit

- payable to bearer on demand

- to be readily converted to

- as needed

- to be subject to

4.Translate the following sentences into English

- Роль банков в осуществлении современных процессов экономической деятельности, бесспорно, велика.

- В общем, банки выполняют роль посредников на экономической арене.

- Современные банки выполняют следующие функции: осуществление денежных переводов, выдача банковских расписок, чеков, открытие долгосрочных и краткосрочных вкладов, выдача кредитов, хранение ценных документов и дорогостоящих вещей, обмен валюты и т.д.

Law of banking

Banking law is based on a contractual analysis of the relationship between the bank (defined above) and the customer—defined as any entity for which the bank agrees to conduct an account.

The law implies rights and obligations into this relationship as follows:

1. The bank account balance is the financial position between the bank and the customer: when the account is in credit, the bank owes the balance to the customer; when the account is overdrawn, the customer owes the balance to the bank.

2. The bank agrees to pay the customer's cheques up to the amount standing to the credit of the customer's account, plus any agreed overdraft limit.

3. The bank may not pay from the customer's account without a mandate from the customer, e.g. a cheque drawn by the customer.

4. The bank agrees to promptly collect the cheques deposited to the customer's account as the customer's agent, and to credit the proceeds to the customer's account.

5. The bank has a right to combine the customer's accounts, since each account is just an aspect of the same credit relationship.

6. The bank has a lienon cheques deposited to the customer's account, to the extent that the customer is indebted to the bank.

7. The bank must not disclose details of transactions through the customer's account—unless the customer consents, there is a public duty to disclose, the bank's interests require it, or the law demands it.

8. The bank must not close a customer's account without reasonable notice, since cheques are outstanding in the ordinary course of business for several days.

These implied contractual terms may be modified by express agreement between the customer and the bank. The statutes and regulations in force within a particular jurisdiction may also modify relationship the above terms and/or create new rights, obligations or limitations relevant to the bank-customer relationship.

Exercises

1. Answer the questions based on the text.

1. What analysis is the banking law based on?

2. The bank account balance is the financial position between the bank and the customer, isn`t it?

3. Under what financial circumstances is the account in credit?

4. Does a bank have a right to combine the customer's accounts?

5. Must a bank disclose details of transactions through the customer's account?

6. Can the statutes and regulations be modified from one bank-customer relationship to another?

7. Do you know the obligations or limitations relevant to the bank-customer relationship?

2. Find the equivalents

согласие	contractual
ограничение	entity
долг	relationship
относящийся	consent
объект, вещь	to modify
степень	relevant
изменять	extent
отношения	duty
договорный	limitation

3. Make up sentences with the following word-combinations

- contractual analysis

- to be based on

- to conduct an account

- customer's agent

- to combine the customer's accounts

- details of transactions

- to be in force within a particular jurisdiction

- to be relevant to

4.Translate the following sentences into English

- Банковское право основано на контрактной основе взаимоотношений банка и клиентов, согласно которой банк обязывается содержать счет клиента.

- Данное право подразумевает определение прав и обязанностей банка и клиента, которые могут варьироваться в зависимости от пожеланий сторон.

- Банк хранит коммерческую тайну: не разглашает информацию, связанную с осуществлением сделок клиентами и операциям по их счетам.

Selling on credit.

There are few axioms in the world of business, but one of them is "if you sell on credit you will increase sales, even to the same customers to whom you previously sold for cash only". This alluring proposition has great appeal to small business firms. Sales are the foundation of profits, and anything that will help to increase sales commands the attention of competent business owners.

Trade credit is credit extended from one business firm to another. Consumer credit is credit given by retailers to their custo­mers, who are the final users of the products or services sold. Sales by manufacturers and wholesalers are almost always made on a credit basis. Retail sales on credit are about half of the total retail sales in the country.

Our business world could not operate without credit. There is not enough currency and coin in the country to finance business trans­actions carried on every day. Total bank deposits exceed the actual money in the country several times over. The key is credit extended throughout the economy. A good credit standing is essential to busi­ness success. Business owners must look for good credit standing of firms or individuals to whom they grant credit.

There are at least four basic types of consumer credit accounts.

Open accounts are ordinary charge accounts. With this type of account the customer charges all purchases throughout the month and is expected to pay the total charges when a statement is sent by the firm. Most firms send out statements monthly, but full payment each month is not insisted upon.

Revolving accounts. It would appear that revolving accounts were designed for customers who live with external indeb­tedness. The firm sets an upper limit to the amount that may be charged, and any purchases below that limit are automatically approved for credit sale. The customer must then pay a certain amount or a specified percentage of the total charges at the end of each month.

Installment accounts were specifically designed to make possible the sale on credit of larger purchases. The customer makes a down payment, preferably at least 20 % of the total pur­chase price, and the balance is spread over a monthly payment plan. Good business practice limits such payments to not more than 3 years. Many installment accounts are for a shorter period. Carrying charges are added to the amount due, usually up to 1 percent per month.

Budget accounts are designed to handle payments that ordinarily fall between short-term open accounts and longer-term installment accounts. No down payment is required, and customers are normally given 3 months to remit the total price in equal payments. Customers are expected to make payments without reminders in the form of statements from the seller.

Credit customers who do not pay on schedule cause the firm several problems. The best course of action when accounts become overdue is to minimize the eventual losses by taking the following steps:

• Send a second statement 60 days from purchase. This could include a note to the effect that "Perhaps our first statement was not received or was mislaid. We know you would not want your credit status impaired".

• Telephone the customer or send a telegram in 70 days, asking the reasons for nonpayment.

• Send a third statement in 75 days. Include a note to the effect that "Your credit status is at stake. We are forced to turn over accounts 75 days old to our collection agency or attorney".

• Send a registered letter in 80 days, including a certified copy of the statement, saying that the account is being referred to the collection agency.

• Turn the account over to the agency or the firm's attorney for legal action in 90 days.

Small firm owners usually have an advantage over large firm owners in this situation, since they know their customers better. If this is so, they, can usually accomplish more through personal contact with the customer than by resorting to the steps just described. But the pos­sible delinquent situation should always be anticipated by picking the right credit customers in the first contact.

Exercises

1. Answer the questions based on the text.

1. What are the main types of credit?

2. What is the difference between trade credit and consumer credit?

3. What are the basic types of consumer credit accounts?

4. How does a revolving account work?

5. Is an instalment account different from a revolving account?

6. When would you recommend use of budget account?

7. What is recommended to handle delinquent accounts?

2. Find the equivalents

первоначальный взнос	charge account
выписка счета	consumer credit accounts
продавать за наличные	total retail sales
обращаться с платежами	down payment
кредит по открытому счету	credit standing
возможные потери	statement
кредитоспособность	sell for cash
общий объем розничных продаж	handle payments
кредитные счета потребителей	eventual losses

3. Make up sentences with the following word-combinations

- to set an upper limit to the amount

- reasons for nonpayment

- to remit total price

- collection agency

- to finance business transaction

- to the effect that

- to become overdue

4. Translate the following sentences into English

- Следует создать доступную для предпринимателей кредитную систему, предоставить возможность приобретать необходимые средства производства, сырьё и комплектующие изделия.

- Одно из правил делового мира гласит: «Если вы продаете что-либо в кредит, вы увеличиваете объем ваших продаж».

- Деятельность современного делового мира трудно представить без услуг по предоставлению кредитов.

- Владельцы бизнеса должны удостовериться в платежеспособности физических или юридических лиц, берущих средства в кредит.

- Общая сумма денег, находящаяся на депозитных счетах банков, в несколько раз превышает сумму наличных денег в стране.

Advertising

What is marketing? Marketing is the creative process of satisfying customer needs first. The information you are interested in is if there is any demand for your goods, what the market potential is, what sort of competition you will meet, i.e. how the price of your goods compares with other competitive products including those produced locally, local conditions and preferences, local trading customs and habits, what seasonal factors should be taken into account and the like.

But in general marketing covers not only market research, but also planning the selection (assortment) of goods, and consequently the production itself, price policy, advertising and promotion of sales, controlling the sales and post-sales servicing.

So marketing is a system of running all the business activities of a company (organization) with respect to coordinating supply and demand for the goods produced. Originally marketing was meant to help avoid over-production in advanced countries.

Marketing within the framework of our economy may also be the coordination of the production and circulation of goods for the purpose of using all the resources for the benefit of people and for covering in the best possible way all their needs (requirements).

Advertising is an important means of promoting the goods that are already being produced as well as new lines of business. There are specialized firms dealing with advertising.

Different kinds of mass media — TV, radio, newspapers, cinema, journals, magazines, posters, — are used for advertising goods. Special leaflets, booklets and other printed matter about goods may be published for the same purpose. Participation in fairs and exhibitions helps promote our goods as well. Also, special advertising conferences may be held. The choice of media for advertising depends on the kind of goods and on the local conditions and people’s habits: sometimes TV and radio ads are best, in other cases it may be trade journals or leaflets distributed among potential buyers.

Advertising is a form of communication used to influence individuals to purchase products or services or support political candidates or ideas. Frequently it communicates a message that includes the name of the product or service and how that product or service could potentially benefit the consumer. Advertising often attempts to persuade potential customers to purchase or to consume a particular brand of product or service. Modern advertising developed with the rise of mass production in the late 19th and early 20th centuries.

Commercial advertisers often seek to generate increased consumption of their products or services through branding, which involves the repetition of an image or product name in an effort to associate related qualities with the brand in the minds of consumers. Different types of media can be used to deliver these messages, including traditional media such as newspapers, magazines, television, radio, billboards or direct mail. Advertising may be placed by an advertising agency on behalf of a company or other organization.

Organizations that spend money on advertising promoting items other than a consumer product or service include political parties, interest groups, religious organizations and governmental agencies. Non-profit organizations may rely on free modes of persuasion, such as a public service announcement.

Money spent on advertising has increased in recent years. In 2007, spending on advertising was estimated at more than $150 billion in the United State and $385 billion worldwide and the latter to exceed $450 billion by 2010.

Advertising is communication used to support political candidates or ideas. Advertising can be displayed on billboards, newspapers, T.V., websites, movies and more. Advertising and its media. There are some principal media for advertising. Newspapers can offer advertisers large circulations (circulation - the average number of copies of a newspaper or magazine that are usually sold each day, week, month etc) and the opportunity to alter their advertisements frequently and regularly. Magazines may be of general interest or they may be aimed at specific audiences Advertising is also used to influence individuals to purchase products services (such as people interested in com­puters or literature) and offer the manufacturers of products of particular interest to such people the chance to make contact with their most likely customers.

The most pervasive (existing or spreading everywhere) media are television and radio. Ad­vertisers can buy short "spots" of time to promote their products or services. Advertising spots are broadcast between or during regular programs. For advertisers the most important facts about a given television or radio program are the size and composition of its audience. The size of the audience determines the amount of money the broadcaster can charge an advertiser, and the composition of the audience determines the advertiser's choice as to when a certain message, directed at a certain segment of the public, should be run. The other advertising media include direct mail, outdoor billboards, posters, and etc. Advertising is on some occasions too intrusive (affecting someone's private life or interrupting them in an unwanted and annoying way).

Exercises

1. Answer the questions based on the text.

1. Why is it necessary to do a lot of market research before selling goods?

2. Why is advertising so important?

3. What does general marketing cover?

4. What is marketing?

5. What does advertising include?

6. What does the choice of media for advertising depend on?

7. What information about the market will you be interested in?

8. Do you agree that the most pervasive media are television and radio?

9. What does the size of the audience determine?

10. Advertising is communication used to influence individuals to purchase products or services, isn`t it?

11. May magazines be of general interest or may they be aimed at specific audiences?

12. Who makes advertisements?

13. May advertising be placed by an advertising agency on behalf of a company or other organization?

14. Can you define marketing as a system of running all the business activities of a company?

15. What is the main goal of advertising? Isn`t it to persuade potential customers to purchase or to consume a particular brand of a product or a service?

2. Find the equivalents

коэффициент спроса	preference
сравнивать	supply-demand balance
доступный	competitive
предпочтение	to compare
конкурирующий	to enjoy demand
баланс спроса и предложения	obtainable
по сравнению с	cut-throat competition
пользоваться спросом	demand factor
жесткая конкуренция	to compare with

3. Make up sentences with the following word-combinations

- to be in great demand

- demand fluctuation

- to enjoy demand

- the amount of money

- someone's private life

- market research

- to run the business activities of a company

4. Translate the following sentences into English

- Маркетинг – творческий процесс, направленный на удовлетворение потребительских нужд.

- Начинающий предприниматель интересуется следующими моментами: есть ли на рынке спрос на изготавливаемую (продаваемую) им продукцию, какие цены за аналогичный товар (услугу) предлагают конкуренты, какова система предпочтений и традиций предполагаемого места осуществления бизнеса, каковы особенности климатических условий местности и др.

- Реклама – это средство продвижения товаров и услуг, как новых, так и уже существующих, на рынке.

- Различные виды средств массовой информации, такие как телевидение, радио, кино, журналы, постеры, газеты, используются в целях реализации рекламы.

- Выбор того или иного средства (массовой информации) для создания рекламы зависит от вида товара или услуги, нуждающегося в рекламе, от местных условий, а также от предпочтений населения.

- Реклама является также и средством коммуникации, имеющим цель убедить кого-либо приобрести тот или иной товар (услугу).

- В последние годы уровень спроса на рекламные услуги значительно вырос.

- Преимущество газет как средства распространения рекламы состоит в том, что они дают большой тираж объявления.

- Журналы, как правило, узкоспециализированы, и рассчитаны на определенный круг читателей.

- Самыми убедительными средствами массовой информации являются радио и телевидение.

- Недостатком рекламы является то, что в избыточных количествах она раздражает и, в случае ее некомпетентности, дезинформирует потребителя.