Indebtedness, down payment, currency, deposit, purchases, charge, statement, certified copy, price, to finance

1. Those goods that a business buys with the intention of selling by way of trade, not goods bought for use by business.

2. The rate at which a commodity can be exchanged for another commodity or for money.

3. To provide or arrange means of payment.

4. A sum owed; debts in general.

5. Money or its equivalent deposited with a person or organization, especially a bank, for safe-keeping, or as security, or to bear interest.

6. Immediate payment; the first payment under a mortgage or hire-purchase agreement.

7. Any kind of money that is in general used as cash; any generally accepted means of payment.

8. A loose-leaf sheet supplied by a bank to each customer, giving details of all debits and credits made.

9. A copy of document which has on it a formal declaration signed by an official that is true copy.

10. A sum of money that has to be paid as a price, especially for services.

Ex. IV Supply the sentences with the missing words.

payments, user, customer, price, statement, amount, attorney, advantage, non-payment, accomplish

1. She explained the … of the new system over the old one.

2. The early computer … had to learn to speak the language of the computer.

3. We estimate, month by month, the … of cash that will be needed.

4. Was the … of rent to be optional?

5. He later became a prominent … .

6. How were they able to … so much so quickly?

7. There were two … in the shop at the moment I came.

8. I get a bank … at the start of every month.

9. Oil … are stable for the first time in years.

10. He was in prison for … of fines.

Ex. V In each of the following, select the word or phrase that best completes the statement or answers the question.

1. If after six month a business shows no profit, it will probably

a. fail c. require a partner

b. succeed d. sell a profit

2. Long-term credit is usually used for

a. supplies c. new equipment

b. payroll cash d. inventory

3. The ability to pay back a loan is called the creditor’s

a. character c. capital

b. capacity d. conditions

4. One of the advantages of a business selling goods on credit is a (an)

a. increase in working capital c. decrease in steady customers

b. increase in operating costs d. increase in sales volume

5. One of the disadvantages of a business selling goods on credit is a (an)

a. increase in operating costs c. increase in sales volume

b. decrease in working capital d. increase in steady customers

6. A customer buying a dining-room set would most likely use which one of the following types of credit?

a. charge account c. installment sales account

b. open account d. cash

7. One of the most popular forms of installment credit is the

a. bank account c. open account

b. revolving account d. charge account

8. The first step in collecting from credit customers is to

a. inform them the amount due c. take legal action

b. close the account d. repossess the product

9. Credit is sometimes extended to a business by a supplier in the form of

a. credit c. a bank note

b. cash d. all of these

10. The ability of a business to buy goods and services when needed with a promise to pay later for the goods and services is called

a. capacity c. capital

b. credit d. income

11. Which of the following services is not provided by a bank?

a. loans c. assessments

b. saving accounts d. protection against bankruptcy

Ex. VI Answer the following questions.

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 installment account different from a revolving account? How?

6. When would you recommend use of a budget account?

7. What is recommended to handle delinquent accounts?

8. How would you explain the statement “The world operates on credit”?

9. What are the advantages to small firm owners of selling on customers’ credit cards? What are the disadvantages?

10. Do you believe the statement that “a firm will sell more merchandise, even to its present customers, if credit accounts are made available”? How do you explain this?

11. What kind of policy do would you establish to handle delinquent accounts? Why?

Ex. VII Make up a plan of the text

Ex. VIII Write a summary of the text.

Ex. IX Express in writing your vision of the role of selling on credit nowadays and its prospects.

APPENDIX III

Supplementary Reading

Unit I

Text 1

The Basic Functions of Economic Systems

One function is to determine what is to be produced and in what quantity. Even a primitive economy must choose between food and shelter, weapons and tools, priests and hunters. In a modern economy the potential variety of goods and services that may be produced is immense. Consider simply the 10,000 new book titles that are published each year or the hundreds of colours of paint or the thousands of styles of clothing that are produced – each of these actual collections being much smaller than modern technology permits.

The second function an economy must perform is to decide how the desired goods are to be produced. The efficient production of goods requires that certain obvious rules be followed: no resource should be used in producing one thing when it could be producing something more valuable elsewhere; and each product should be made with the smallest possible amount of resources.

A functioning price system steers resources into their most important use by appealing to the desires of their owners for large incomes. For example, the person capable of being a surgeon is drawn to this occupation from, say, that of a high school teacher by the promise of annual earning (= price of labour) much more than those of the high school teacher. Capital is drawn from a faltering trade to a booming new industry in which it receives a higher return.

The third function of an economy is to determine who gets the product. Family A gets $ 5,000 worth of goods this year, family B five times as much – how is the division to be decided? The incomes of individuals are determined by the quantities of resources (labour skills, capital in all its forms) they own and the prices they receive for the use of these resources.

Workers are incited by the price system to acquire new skills and to exercise them diligently, and families are encouraged to savings (capital accumulation) by the payment of interest or dividends. The inheritance of both personal ability and wealth also enter into the distribution of income.

If the price system is working reasonable well it performs all of these economic functions with remarkable subtlety and precision.

1. What is the first function of every economic system?

2. What does the efficient production of goods require?

3. How does a functioning price system steer resources into their most important use?

4. What can you say about the second function of an economy?

5. What is the third function of an economy to determine?

6. What system performs all functions of economic systems and in what case?