Value-added tax

1. Read the following words and word combinations and learn their meanings by heart:

value-added tax	податок на додану вартість
to impose	стягувати
glue	клей
depreciation	амортизація
amount	кількість
burden	тягар
retail sale tax	податок на роздрібний продаж
to apply	застосовувати
to adopt	приймати
exempt	вільний

2. Read and translate the following text.

Value-added tax (VAT) is a tax imposed by a government at each stage in the production of a good or service. The tax is paid by every company that handles a product during its transformation from raw materials to finished goods. The amount of the tax is determined by the amount of the value that a company adds to the materials and services it buys from other firms.

Suppose that a German company making notebooks buys paper, cardboard, and glue worth 1.000 German marks. Then this company adds 500 marks in labour costs, profits, and depreciation, and sells the notebooks for 1.500 marks. The value-added tax at this stage is calculated on the 500 marks. The companies that had sold the paper, cardboard, and glue to the notebook company would also pay a tax on their value added. In this way, the total amount of value added that is taxed at each stage of production adds up to the total value of the final product.

Firms that pay VAT collect it from buyers of their products. From the amount collected, most firms can deduct the VAT paid on their own purchases, to calculate how much VAT to pass to the government. As a result, the burden of value-added tax falls on the consumer. In this sense, the final effect is equal to that of a retail sales tax. The tax is levied at a fixed percentage rate and generally applies to all goods and services. However, some countries have more than one VAT rate. In these nations, the less necessary a product is considered to be, the higher the rate will be.

Not all goods and services supplied are subject to VAT; there are certain goods and services which are “exempt”. In addition, not all businesses require to register for VAT.

In 1954, France became the first country to adopt a value-added tax. Today, this tax is growing in popularity, and about 40 countries use it. Many large industrial nations, particularly in Europe use it.

Exercise 1. Find English equivalents of the following words from

the text and memorize them:

податок на додану вартість; стягувати; обробляти; сировина; кількість; клей; віднімати; тягар; споживач; податок на роздрібний продаж; вільний; приймати.

Exercise 2. Complete the sentences from the text.

1. Value-added tax (VAT) is a tax... . 2. The tax is paid by every company that handles... . 3. The amount of the tax is determined by … . 4. Suppose that a German company making notebooks buys … . 5. Firms that pay VAT collect it from buyers of … . 6. The tax is levied at a fixed percentage rate and generally applies to … . 7. Not all goods and services supplied are subject to … . 8. In addition, not all businesses require to … . 9. In 1954, France became the first country to adopt … .

Exercise 3. Answer the questions:

1. What is VAT?

2. When is VAT paid?

3. How is the amount of VAT determined?

4. Who do firms that pay VAT collect it from?

5. When does the burden of VAT fall?

6. Are all goods and services supplied subject to VAT?

7. Do all businesses require to register for VAT?

8. What country was the first to adopt a value-added tax?

Exercise 4. Speak on the topic:

- the principles of a value-added tax.

Exercise 5. Act out the dialogue on the basis of the following

assignment:

Your friend is interested in VAT. Speak about the principle of VAT and when it is levied.

Text 10

Capital

1. Read the following words and word combinations and

learn their meanings by heart:

earnings	дохід
a fixed capital	основний капітал
facilities	устаткування
to replace	заміняти
outdated	застарілий
to estimate	оцінити
to set aside	відкладати
a working and circulating capital	оборотний капітал
а total capital	загальна власність
extent	розмір

2. Read and translate the following text.

Capital is an economic term for wealth, other than land, that is used to produce more wealth. People’s invested savings are capital, because they produce more wealth through the interest or dividends that they earn. Land and other resources are not considered capital, because people did not produce them. Most assets used by a business represent capital, because they are used to produce earnings. Such items as personal food, furniture, and clothing are considered wealth but not capital. These items do not produce added wealth. There are two types of business capital, fixed and working.

Fixed capital includes industrial and commercial buildings, machinery, equipment, and other facilities used to produce goods and services. By producing goods and services, these fixed-capital items create new wealth. Items of fixed capital must be replaced from time to time, when they wear out or become outdated. The owner of a fixed-capital item tries to estimate the economic life of such an item when acquiring it. Guaded by this estimate, the owner can set aside enough money to replace the item when it becomes useless.

Working or circulating capital consists of cash, stock, and accounts receivable (money owed to the business). These items usually do not produce wealth themselves, but they make it possible for fixed capital to do so. Businesses must have cash to pay for labour and other expenses. They need stocks of raw materials, supplies, work in production, and finished products. Businesses usually keep accounts receivable so that customers can purchase goods and services and pay later.

Total capital. The extent of a company’s ownership of capital is usually expressed in terms of money. For example, a Japanese company may have been capitalized at 10 million yen. This means that investors have invested 10 million yen in the company. This money has been used to buy fixed and working capital goods and other items. Money invested in business or available for investment is often called capital funds.

Exercise 1. Find English equivalents of the following words from

the text and memorize them:

багатство; заощадження; дохід; основний капітал; устаткування; заміняти; зношений; застарілий; оцінити; відклади достатньо грошей; оборотний капітал; загальна власність майна; розмір.

Exercise 2. Complete the sentences from the text.

1. Capital is an economic term for … . 2. People’s invested savings are capital, because they produce more wealth through … . 3. Most assets used by a business represent … . 4. There are two types of business capital … . 5. Fixed capital includes … . 6. Items of fixed capital must be replaced from time to time, when they … . 7. Working or circulating capital consists of … . 8. Businesses must have cash to pay for … . 9. Total capital. The extent of a company’s ownership of capital is usually expressed in … . 10. Money invested in business or available for investment is often called … .

Exercise 3. Answer the questions:

1. What is capital?

2. What are two types of business capital?

3. What does fixed capital include?

4. When must items of fixed capital be replaced?

5. What does working or circulating capital consist of?

6. Why must business have cash?

7. What do you know about total capital?

Exercise 4. Speak on the topics:

- fixed capital;

- working or circulating capital;

- total capital.

Exercise 5. Act out the dialogue on the basis of the following

assignment:

Your friend wants to know something about capital. Speak about types of business capital.

Text 11

Business budgets

1. Read the following words and word combinations and learn their meanings by heart:

expenditure	витрати
an estimate	кошторис, калькуляція
an employee	працівник
full-time	повний робочий день
overall operating budget	загальний діючий бюджет
annual	щорічний
a quarterly budget	квартальний бюджет
an adjustment	поправка
a capital budget	капітальний бюджет
worn-out	зношений

2. Read and translate the following text.

Budget is a financial plan that helps people make the best possible use of their money. It identifies sources of income and assists in planning expenditure. Income and expenses may vary, and so most budgets consist – at least a part – of estimates.

A budget helps a business company control its costs effectively. It shows the profits expected from various activities of the firm. It also helps management decide which projects are most important for the growth of the firm.

A small company may have one employee who prepares the firm’s budget. A large company may have an entire budget department with a full-time staff. This department is directed by a senior executive called a financial director.

Most companies use two types of budget. These types are an overall operating budget and a capital budget.

An overall operating budget summarizes the entire company’s financial plans. It is based on the budgets of individual departments. Most companies prepare an annual overall operating budget, but some also have a monthly or quarterly budget. A company’s advertising, production, research, and sales departments may each prepare a budget. The budget department then combines these budgets and makes any necessary adjustments.

Most companies prepare an income statement at the end of the year that is checked by accountants employed outside the firm. The overall operating budget includes an estimate of income for the next year. Firms compare their year-end income statement with the budget estimate made earlier for the same year. This comparison determines the accuracy of the budget and helps a company plan its future budgets.

A capital budget covers certain kinds of expenditure for a period of several years. It includes the company’s expected costs for future construction, equipment, furniture, investments, and land. A capital budget also includes expenditure to replace worn-out buildings and equipment. In addition, a capital budget shows the proposed sources of funds for the expenditure involved. These sources may include bank loans, company earnings, and the sale of bonds and stock.

Exercise 1. Find English equivalents of the following words from

the text and memorize them:

визначати джерела; допомагати в плануванні витрат; відрізнятися; кошторис; ріст фірми; працівник; штат; працюючий повний робочий день; загальний діючий бюджет; щорічний; квартальний бюджет; реклама; дослідження; необхідні поправки; порівняння; капітальний бюджет; покривати; очікувані кошти; зношений; джерела: акції та облігації.

Exercise 2. Complete the sentences from the text.

1. Budget is a financial plan that ... . 2. Income and expenses may vary, and so most budgets consist – at least a part – of ... . 3. A budget helps a business company control its ... . It shows the profits expected from ... . 4. A small company may have one employee who prepares ... . 5. Most companies use two types of budget. These types are ... . 6. An overall operating budget summarizes ... . 7. Most companies prepare an annual overall operating budget, but some also have ... . 8. Most companies prepare an income statement at the end of ... . 9. The overall operating budget includes an estimate of income for ... . 10. A capital budget covers certain kinds of expenditure for ... . 11. A capital budget also includes expenditure to replace ... . 12. In addition, a capital budget shows the proposed sources ... .

Exercise 3. Answer the questions:

1. What is budget?

2. How is budget used in business?

3. Who prepares the firm’s budget?

4. What types of budget do most companies use?

5. What does an overall operating budget summarize?

6. What department combines all budgets and makes

necessary adjustments?

7. What do most companies prepare at the end of the year?

8. What does a capital budget cover and what does it include?

Exercise 4. Speak on the topics:

- an overall operating budget;

- a capital budget.

Exercise 5. Act out the dialogue on the basis of the following

assignment:

Your friend wants to know something about business budgets. Speak about two types of budget.

Text 12

Banks

1. Read the following words and word combinations and learn their meanings by heart:

savings-bank	ощадна каса
savings	заощадження
a source	джерело
a source of credit	джерело кредитування
a depositor	вкладник, депозитор
a depositary	депозитарій
a withdrawal	вилучення
a commercial bank	комерційний банк
a loan	позика
a letter of credit (L/C)	акредитив
a trust	траст; трест
an interest	процент
to select	вибирати
a selection	вибір, відбір
integrity	цілісність; чесність
to take into consideration	брати до уваги
an offer	пропозиція
to offer	пропонувати
a rate	курс
reasonable	розумний, резонний
confidence	впевненість
to require	вимагати
a requirement	вимога
a connection	зв’язок
an insurance	страхування
expenses	витрати
in regard to	по відношенню до
to alert	застерігати

2. Read and translate the following text.

There are different banks. They may be classified according to different services they perform.

Savings banks. These are institutions which accumulate savings in small accounts. They are also valuable sources of credit for businesses. Savings banks, as a rule, invest their funds in long-term credit instruments. That is why, most savings banks require their depositors to give notice before a withdrawal.

Commercial banks. In most countries commercial banks serve as a depository of funds and a source of credit. Today they are active in giving short-term loans to business.

Commercial banks also deal with foreign exchange and letters of credit.

Investment banks. They do not accept checking deposits. They promote industry through the sale of large issues of stocks to investors.

Trust companies are such financial institutions which administer funds or property for the benefit of others. They serve as trustees for property or guardians of minors, or agents for stocks. In a word, they manage business in the interests of others.

The most important thing in the choice of a bank is its integrity. The size and the type of the bank must be taken into consideration too.

If you are going into business, there is an advantage for a small business to place an account in a small bank. The staff of such a bank knows each customer and can estimate your business better.

However, there are the advantages of a larger bank. It is true, that dealings with a large bank are more impersonal. But, it is also true, that a large bank can offer more facilities. Large banks can make a loan at more favourable interest rate. They also can make as large a loan as it is desired.

In any case, selecting a bank people learn as much information about the reputation of a bank as possible.

As a summary, therefore, the following six guides are suggested

1. Choose a bank whose officers possess character, leadership, and the willingness to assume a risk provided, there is a reasonable chance of repayment.

2. Choose a progressive bank – one whose officers are alert to current industrial trends and are willing to make loans for new products and more efficient processes.

3. Choose a bank that stresses an attitude of friendliness to a small business.

4. Choose a bank that has confidence in the future of your community and thus is willing to invest in it.

5. Choose a bank that quotes reasonable interest rates.

6. Choose a bank that gives good service.

Exercise 1. Find English equivalents of the following words from

the text and memorize them:

накопичувати заощадження; джерело кредитування; вкладник; вилучення; позика; акредитив; цілісність; оцінювати; безособовий; безпроцентний; приймати на себе; відшкодування; застерігати.

Exercise 2. Complete the sentences from the text.

1. There are different banks. They may be classified according to … . 2. Savings banks are institutions which … . 3. That is why, most savings banks require their depositors to … . 4. In most countries commercial banks serve as … . 5. Commercial banks also deal with … . 6. Investment banks do not accept … . They promote industry through the sale of … . 7. Trust companies are such financial institutions which … . 8. The most important thing in the choice of a bank is … . 9. If you are going into business, there is an advantage for a small business to place an account in … . 10. It is true, that dealings with a large bank are more … . 11. Large banks can make a loan at … . 12. Choose a bank whose officers possess … . 13. Choose a progressive bank – one whose officers are … . 14. Choose a bank that stresses an attitude of … . 15. Choose a bank that has confidence in the future of … . 16. Choose a bank that quotes ... . 17. Choose a bank that gives ... .

Exercise 3. Answer the questions:

1. What are the main types of banks?

2. What are their functions?

3. What is the most important thing in the choice of a bank?

4. What bank would one prefer doing small business?

5. Are any advantages of a large bank?

6. What are the six main guides in choosing a proper bank?

7. What guide do you think is the most important? Give your

reasons.

Exercise 4. Speak on the topics:

- kinds of banks;

- how to select a bank.

Exercise 5. Act out the dialogue on the basis of the following

assignment:

Your friend is interested in banks. Speak about different kinds of banks.

Text 13

Cheque

1. Read the following words and word combinations and

learn their meanings by heart:

a bearer	пред’явник
a payee	одержувач
a cancelled cheque	погашений чек
an account holder	власник рахунку
to list	складати список
to enclose	додавати
to cash	одержувати гроші
to endorse	індосувати

2. Read and translate the following text.

Cheque is a written order directing a bank to pay money to a person or organization, or to the bearer. A cheque may be written by any person or organization with money in a cheque account. The bank transfers the amount specified on the cheque from the account to the payee, the designated person on organization. The word cheque is spelled check in the United States.

Cheques are widely used because they are safer and more convenient than cash. For example, a person who has a cheque account does not have to carry large sums of money, which could be lost or stolen. Cheques can be sent safely through the post because only the payees can legally cash them. Used cheques, called cancelled cheques, serve as convenient records of payment.

When a person or organization opens a cheque account, the account holder receives a chequebook containing blank cheques. The account holder issues a cheque by writing in the date, the name of the payee, and the amount of money involved. The account holder also signs the cheque. At regular intervals the bank sends the account holder a statement. This document lists the deposits made into the account, and the amounts of the cheques written against it. The statement also shows the balance, the amount remaining in the account. The bank may enclose the cancelled cheques for the period.

The payee may cash the cheque – that is, exchange it for cash – or deposit it in a bank account or transfer it to another person or organization. To cash, deposit or transfer a cheque, the payee endorses it by signing it on the back. The endorser becomes responsible for the payment of the cheque if the issuer’s account lacks enough money to cover it.

After a cheque has been deposited in a bank, the bank collects its money by sending the cheque back to the bank of the cheque writer. The cheque writer’s bank then charges the depositor’s account for the amount involved.

Exercise 1. Find English equivalents of the following words from

the text and memorize them:

написаний наказ; пред’явник; переказ грошей; одержувач; вкрадений; використані; погашені чеки; власник рахунку; складати список; кількість, яка залишилась на рахунку; додавати погашені чеки; одержувати гроші; індосувати; нестаток грошей.

Exercise 2. Complete the sentences from the text.

1. Cheque is a written order directing a bank to pay ... . 2. A cheque may be written by any person or organization with money in ... . 3. Cheques are widely used because they are ... . 4. Cheques can be sent safely through the post because only the payees can ... . 5. Used cheques, called ... . 6. When a person or organization opens a cheque account, the account holder receives a ... . 7. The account holder issues a cheque by ... . 8. At regular intervals the bank sends the account holder ... . This document lists the deposits made into the account, and ... . 9. The payee may cash the cheque – that is, exchange it for ... . 10. To cash, deposit or transfer a cheque, the payee endorses it by ... . 11. After a cheque has been deposited in a bank, the bank collects its money by ... .

Exercise 3. Answer the questions:

1. What is cheque?

2. Who can write cheque?

3. Why are cheques widely used?

4. What cheques serve as convenient records of payment?

5. What does a person or organization receive, when opens

a cheque account?

6. What should be written on a cheque?

7. What does the bank send the account holder at regular

intervals?

8. What does the payee do when he cashes, deposits or

transfers a cheque?

Exercise 4. Speak on the topic:

- cheque operations.

Exercise 5. Act out the dialogue on the basis of the following

assignment:

Your friend wants to know something about cheques. Speak about cheque and operations with it.

Text 14