Text 6. Accounting Information

Accounting provides informational access to a company's financial condi­tion for three broad interest groups. First, it gives the company’s management the information to evaluate financial performance over a previous period of time, and to make decisions regarding the future. Second, it informs the general pub­lic, and in particular those who are interested in buying its stock, about the fi­nancial position of the company. Third, accounting provides reports for the tax and regulatory departments of the government. In general, accounting information can be classified into two main categories: financial accounting (or public information) and managerial accounting (or private information).

Managerial accounting deals with cost and profit relationships, efficiency and productivity, planning and control, pricing decisions, capital budgeting, etc. Not being generally spread outside the company, this information pro­vides a wide variety of specialized reports for division managers, department heads, project directors.

A standard set of financial statements is expected to be prepaid regularly by financial accounting and published in an annual report at the end of the fiscal year. Being prepared in accordance with generally accepted accounting principles, these  statements include the following items: l) the balance sheet, 2) the statement of cash flows, 3) the income statement, 4) the statement of retained earnings.

Information relating to the financial position of a company, mainly about assets and liabilities, is presented in a balance sheet. The statement of cash flows shows the changes in the company's financial position and provides information which is not available in either an income statement or a balance sheet. Thus, the statement of cash flows represents the sources and the uses of the company's funds for operating activities, applications of working capital and data about additional financial support. Provided the company couldn't generate sufficient cash to finance its activities, it would be necessary to bor­row money and it should be indicated in the statement.

Another financial statement disclosing the results of the company's activ­ity is known as the income and expense statement. Prepared for a defined time interval, this statement summarizes the company's revenues, expenses, gains and losses and shows whether a company has made a profit within the period. Income is considered to be the difference between revenues and expenses. If the total expenses exceeded the total revenues during the period, the difference would be the net loss of the company. Revenues are transactions that represent the inflow of assets as a result of operations - that is, the assets received from selling goods and rendering services. Expenses are transactions involving the outflow of assets in order to generate revenue, such as wages, salaries, rent, interest and taxes. In addition to disclosing revenues and expenses, the income statement also lists gains and losses from other kinds of transactions such as the sale of plant assets or the payments of long-term liabilities.

The income statement excludes the amount of assets withdrawn by the owners, in a corporation such withdrawal of assets being called dividends. The separate statement of retained earnings and stockholder's equity shows inves­tors what has happened to their ownership in the company, how earnings and new stock issuance have increased its value, and what dividends were paid.

Each of these reports contains figures for previous years and for the cur­rent period, providing a way of comparing present and past company perfor­mance. Being prepared for the use of management, the financial statements contain neither debit nor credit columns. These statements are accompanied by additional data about the particular accounting method used, as well as explanations about the most important events within the previous year.

 

Exercise 38. Translate into Ukrainian the following word-combinations. Make up your own sentences with them.

To make decisions regarding the future, to provide reports for the tax and regulatory departments, financial accounting, capital budgeting, division managers, department heads, project directors, generally accepted accounting principles, to provide a wide variety of specialized reports, balance sheet, the statement of cash flows, the income statement, the statement of retained earnings, assets and liabilities, to represent the sources and the uses of the company’s funds, application of working capital, data about additional financial support, to be indicated in the statement, a defined time interval, to summarize the company’s revenues (expenses, gains and losses), the net loss of the company, rendering services, to generate revenue, stockholder’s equity, stock issuance, present and past company performance.

Exercise 39. Find in text 7 synonyms to the following words and groups of words: concerning the future; conclusions about the price; an external part; the uses of capital; a fixed interval; wide; a number of means of supply; a yearly report; the month before this one.

 

Exercise 40. Form the synonymous pairs from the following words: to distribute, to deal in, to accept, to spread, to agree, to borrow money, to trade, to disclose, to handle, to summarize, to be interested in, to offer, to withdraw, to be concerned with, to evaluate, to make known, to give the main points of smth, to get a loan, to render, to take back, to generate, to determine, to deal with, to produce.

 

Exercise 41. Find in the dictionary the meanings of the words: expenditures, expenses, costs, cost. Match the definitions to these words.

1. … the amount of money spent on running a business or part of it.

2. … an amount of money spent.

3. … the price to be paid or amount needed for something.

4. … sums of money spent by a company on goods, services or resources that do not become part of the company’s assets such as rent, wages, insurance, energy, etc.

 

Exercise 42. . Put the verbs in brackets into the correct form.

1. Equity would decrease if the owners (to withdraw) funds from the busi­ness. 2. If there (to be) a change in the amount for one item in a balance sheet, it will be always accompanied by an equal change in some other item. 3. If cash is received from the issuance of bonds, this figure (not to be shown) in the income statement. 4. The same amount of depreciation would be evaluated each year if the accountant (to choose) the straight-line method. 5. If the company (to choose) proper ways to use its assets for producing goods and rendering services, it would have earned enough revenue to stay in business. 6. If a customer received commodities or promised to pay the company in the future, the revenue (to be recorded) in accounts receivable. 7. If cash (to be paid) to purchase equipment, this figure will be added to the asset account of a plant. 8. If the company (to introduce) a new product, it would have increased the company's future cash flows.

Exercise 43. Match each sentence part on the left with its appropriate part on the right.

1. The income statement summarizes the data	a) about the changes in the financial structure of the company.
2.  A balance sheet represents	b) about a company's revenues, expenses, gains and losses.
3. The statement of cash flows provides the information	c) the main accounting equation.
4. The statement of retained earnings concerning pricing decisions shows investors	d) planning, control, budgeting and discloses the information.
5. Financial accounting   includes the information	e) what has happened to their ownership in the company, how earnings and new stock issuance have   increased its value, and what  dividends were paid.
6. Managerial accounting deals with	f) relating to the profitability of the company and its financial position.

Exercise 44. Answer the following question on text 6.

1. Who is interested in accounting information? 2. What are the main differences between financial and managerial accounting? 3. What financial statements are included in an annual report and when are they published? 4. What information can stockholders get from the balance sheet? 5. Why is it important to prepare the statement of a company's cash flows? 6. What kind of information is represented in the income statement? 7. How can revenues and expenses be defined? 8. What statement shows the amount of a stockholder's dividends? 9. Why is it necessary to prepare additional reports? 10. What statement contains debit and credit columns?

 

Exercise 45. Learn the following words and word combinations.

asset(s)	– актив, фонд; капітал, майно
assets and liabilities	– активи і пасиви
capital assets	– основні фонди
term	– термін, період
bond	– облігація, боргове зобов’язання
terms (pl)	– умови
credit terms	– умови позики
lending terms	– умови видачі кредиту
item	– окремий предмет; стаття (в рахунку балансу), пункт, позиція, параграф
account	– рахунок, фінансовий звіт
accounts (pl)	– звітність, ділові книги
accounts receivable	– рахунки дебіторів, рахунки для одержання; очікувані поповнення
accounts payable	– рахунки для виплати / сплати, очікувані виплати / сплати
capital account	– рахунок основного капіталу, рахунок основних фондів; баланс руху капіталів
income account	– рахунок доходів і збитків
current account	– поточний рахунок
current assets	– оборотні засоби ( фонди), поточні, (легкореалізовані; ліквідні) активи
current liabilities	– короткострокові зобов’язання, поточні пасиви
ant noncurrent (long-term) liabilities	– довгострокові зобов’язання
tangible assets	– матеріальні активи
intangible assets	– нематеріальні активи
stock-in-trade	– товарний запас, залишок непроданих товарів
goodwill	– гудвіл, ділова репутація; престиж фірми
copyright	– авторське право
real estate	– нерухоме майно
net worth	– вартість майна за вирахуванням зобов’язань; власний капітал (підприємства), чиста вартість компанії
equity	– капітал компанії, акціонерний капітал, активи (підприємства) за вирахуванням заборгованості
investment interest	– відсоток інвестицій
stockholder (syn . shareholder)	– акціонер, власник державних цінних      паперів
proper	– правильний, належний
operate	– працювати, управляти, керувати

Exercise 46. Read, translate and give the gist of text 7.

⇐ Предыдущая15161718192021222324Следующая ⇒

Поделиться: