3. Say what you have learnt about:
taxation as a system;
the objects who are required to compute their tax liability;
the sources for government expenses and finance;
the ways to keep the economy stable;
the identity of taxation features in all countries;
the types of taxes;
tax management, its tasks;
the fiscal system of Ukraine and the principles it is based on;
tax benefits if there are any;
the local (city) taxes.
4. Retell the text and then give your points of view on such problem questions as:
Why has tax management become an important speciality throughout the world?
Why do most businessmen depend on tax manager (accountant)? What does a tax accountant have to do?
What methods of depreciation offer a tax advantage? (come back to the previous lesson)
What does tax accounting deal with?
5. Discuss the following statements:
Tax accounting is a major concern in business.
Advantages of the progressive income tax rate.
What do you know about double taxation? How can it be eliminated or reduced?
6. Indicate whether each of the following statements is true or false:
1. Only individual citizens, not businesses, pay income taxes in Ukraine
2. The Ukrainian government is the only level in the country that can levy income taxes.
3. Many businesses and enterprises in Ukraine pay more than 90 per cent of their net income to state and local authorities.
4. In a progressive income tax, all earnings are taxed at the same percentage rate.
5. There is no tax advantages available to small businesses.
6. There is never any accounting problem that results from differences in the amount of taxable income and the amount of income reported on financial statements.
Unit 9. The basis of financial management
1. Read and memorize the following words and word combinations:
outline – схема
to intend – мати намір
to obtain – одержувати
to implement – здійснювати
performance – робота, діяльність
to monitor – контролювати
to evaluate – оцінювати
to modify – змінювати
to budget – передбачати в бюджеті
goal and objective – заключна мета и ближня мета
source of funds – джерело грошових засобів
sales revenue – доход від продажу
equity capital – акціонернийкапітал
dept capital – позиковийкапітал
sale of assets – продажактивів
to assign a cost – визначати вартість
budgeting – розробка бюджету
to incur costs – нестивитрати
companywide budget – бюджетусієїкомпанії
budget item – статтябюджету
zero-base budgeting – бюджетуваннянуля
drastic step – радикальний крок
last report – останній рятівний засіб
merger – об'єднання, злиття
interim – проміжний
2. Read translate and retell the text
The basis of financial management is a financial plan. A plan is an outline of the actions by which an organization intends to accomplish is goals.
A financial planis a plan for obtaining and using the money needed to implement an organization’s goals. Once a financial plan is developed and put into action, the firm’s performance must be monitored and evaluated. And, like any other plan, it must be modified if necessary.
Developing the Financial Plan
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Establish organization goals and objectives |
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Budget the money needed to accomplish the goals and objectives |
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Identify the sources of funds | ||||||
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Sales revenue 1 |
Equity capital 2 |
Debt capital 3 |
Sale of assets 4 | ||||
Financial planning (like all planning) begins with the establishment of goals and objectives. Next, planners must assign cost to these goals and objectives. That is, they must determine how much money is needed to accomplish each one. Finally, financial planners must identify available sources of financing and decide which to use. In the process, they must make sure that financing needs are realistic and that sufficient funding is available to meet those needs.
Three Steps of Financial Planning
1. Establishing Organizational Goals and Objectives.Establishing goals and objectives is an important management task. A goal is an end state that the organization wants to achieve. Objectives arespecificstatements detailing what the organization intends to accomplish within a certain period of time. If goals and objectives are not specific and measurable, they cannot be translated into costs and financial planning cannot proceed. They must also be realistic. Otherwise, it may be impossible to finance or achieve them.
2. Budgeting for Financial Needs. Abudgetis a financial statement that projects income and/or expenditures over a specified future period of time. Once planners know what the firm’s goals and objectives are for a specific period of time they can estimate the various costs the firm will incur and the revenues it will receive. By combining these items into a companywide budget, financial planners can determine whether they must seek additional funding from sources outside the firm.
Usually the budgeting process begins with the construction of individual budgets for sales and for each of the various types of expenses: production, human resources, promotion, administration and so on.
Most firms today use one of two approaches to budgeting. In the traditional approach, each new budget is based on the dollar amounts contained in the budget for the preceding year. The problem with this approach is that it leaves room for the manipulation of budget items to protect the (sometimes selfish) interests of the budgeter or his or her department.
This problem is essentially eliminated through zero-base budgeting.
Zero-base budgeting is a budgeting approach in which every expense must be justified in every budget. It can dramatically reduce unnecessary spending. However, some managers feel that zero-base budgeting requires too much time-consuming paper-work.
3. Identifying Sources of Funds.The four primary sources of funds aresales revenue,equity capital,debt capital, andthe sale of assets. Future sales generally provide the greatest part of a firm’s financing.
Sales revenueis the first type of funding.
The second type of funding is equity capital, which is money received from the sale of shares of ownership in the business. Equity capital is used almost exclusively for long-term financing. Thus it might be used to start a business and to fund expansions or merges. It would not be considered for short-term financing needs.
The third type of funding is debt capital, which is money obtained through loans. Debt capital may be borrowed for either short-or long –term use.
The forth type of funding is the sale of assets. A firm generally acquires assets because it needs them for its business operations. Therefore, selling assets is a drastic step. However, it may be a reasonable last resort when neither equity capital not debt capital can be found. Assets may also be sold when they are no longer needed.