V. Accounting and Auditing

Read and translate the text

Find the answers in the text:

1. What does a man feel when he sets up a business?

2. What does a man expect in return?

3. What is accounting?

4.What does bookkeeping deal with?

5. What is accounting divided into?

Whenever a man sets up a business it is because he feels he can produce some useful commodity or service which will be needed by his fellow citizens. In return he expects to be able to earn a profit on his business. To conduct his affairs efficiently and profitably the businessman must have some knowledge of accounting.

Accounting is the language of finance which all business decision – makers must understand. It is the process of capturing, processing, and communicating financial information. In other words, it is an information system that accumulates, records, classifies, summarises, and reports commercial transactions. The aim of this process is to show the financial condition of a business entity. This information, in the form of financial statements, is then communicated to those who make decisions concerning the operations of an enterprise.

Bookkeeping is a small part of the system and deals with record-keeping.

Accounting information is used by managers, investors, and different groups in society, for example, tax authorities, labour unions, local governments, financial analysts etc. From this perspective, accounting is divided into managerial and financial accounting.

The major branches of accounting are public, private, and governmental accounting.

Public accounting refers to the work done by independent Certified Public Accountants (CPA), the corresponding professional British title being Chartered Accountants. They audit the books of companies to ensure that their financial statements and records are properly stated.

Private accounting refers primarily to the private sector of the economy and involves the analysis and recording of financial information by accountants who are employees of the business entity.

Governmental accounting is the accounting function performed for central (federal and state) and local governmental institutions.

After text exercises

VI. Complete the following sentences according to the text:

1. In return he expects to be able to earn …

2. It is the process of capturing …

3. The aim of this process is to show the financial …

4. Accounting is the language of finance which all business decision – makers …

5. The major branches of accounting are …