V. Accounting

Read and translate the text:

Find the answers in the text:

1.What does accounting show?

2.What does an accounting department do?

3.What are the two types of records which most businesses prepare?

4.What is ratio analysis?

5.What are the three main categories of ratios in finance?

Accounting shows a financial picture of the firm. An accounting department records and measures the activity of a business. It reports on the effects of the transactions of the firm’s financial condition. Accounting records give a very important data. It is used by management, stockholders, creditors, independent analysts, banks and government.

Most businesses prepare regularly the two types of records. They are the income statement and the balance sheet. These statements show how money was received and spent by the company.

One major tool for the analysis of accounting records is ratio analysis. A ratio analysis is the relationship of two figures. In finance we operate with three main categories of ratios. One ratio deals with profitability, for example, the Return on Investment Ratio. It is used as a measure of a firm’s operating efficiency.

The second set of ratios deals with assets and liabilities. It helps a company to evaluate its current financial position.

The third set of ratios deals with the overall financial structure of the company. It analyses the value of the ownership of the firm.

After text exercises

VI. Complete the sentences according to the text:

1. Accounting shows a financial picture …..

2. Accounting records give a very …..

3. Most businesses prepare regularly the two …..

4. One major tool for the analysis of accounting records is …..

5. In finance we operate with three main …..

VII. Match the sentence halves:

1. The second set of ratios deals …	a)… the income statement and the balance sheet.
2. Most businesses prepare regularly …	b)…and measures the activity of a business.
3. Two types of records are…	c)… its current financial position.
4. An accounting department records …	d)… two types of records.
5. It helps a company to evaluate …	e)…. with assets and liabilities.

VIII. Think of some questions to the following answers:

1.A financial picture of the firm.

2.Accounting records.

3.Two types of records.

4.With three main categories of ratios.

5.With assets and liabilities.