Text 1. Introduction to accounting

New words and word combinations:

1. Purpose – цель, назначение.

2. Accounting – учет, отчетность.

3. Owner – владелец, хозяин, собственник.

4. Profitability – прибыльность, доходность, полезность, выгодность, рентабельность.

5. Financial condition – финансовое состояние.

6. To measure – оценивать, определять

7. To extend – продлять.

8. Tax – налог, пошлина, сбор.

9. Regulation – регулирование.

10. To analyse – анализировать.

11. Data (pl. from datum) – данные, факты, сведения, информация.

12. Item – пункт, параграф, статья.

13. Percentage – процент, процентное отношение, процентное содержание

14. Ratio – пропорция, коэффициент, соотношение

15. Transaction – дело, сделка

16. Valuation – оценка (имущества)

17. To purchase – покупать, закупать, приобретать

18. Customer – покупатель

19. Merchandise – (сущ.) товары, (гл.) торговать

20. Manufacture – производство, изготовление, обработка

21. Manufacturing – обрабатывающая промышленность

22. Charge – плата, сбор, цена

23. Fee – плата за услуги, взнос

24. Software – документация, программное обеспечение

25. Product – продукт, продукция, изделие

The purpose of accounting.

The purpose of accounting is to provide financial information about a business activity. Owners, managers, creditors and governmental agencies all need financial information provided by accounting system. The table presented bellow shows some of the users of accounting information and the information they need.

The accounting process.

Accounting is the art of gathering information about a business and reporting this information to users. The six major steps of the accounting process are: analyzing, recording, classifying, summarizing, reporting and interpreting. People must analyze and interpret accounting data.

Analysing is looking to see what happened and thinking about how this effects the business.

Recording is entering financial information into the accounting system.

Classifying is sorting and grouping like items together rather than merely keeping a simple diary like record of numerous events.

Summarizing is bringing the various items of information together to explain the result.

Reporting is telling the results in a commonly understood language. The results are most often reported in a table of numbers.

Interpreting is deciding the importance of the various reports. This may include percentage analyses and the use of ratios to help explain how pieces of information relate to one another.

Generally accepted accounting principles

Generally accepted accounting principles (GAAP) is a commonly used term. Just as we must all speak the same language in order to be understood, accounting has a common or generally accepted language to record transactions and express valuations (accounting principles) if they are to be understood by the various users of accounting information

Types of businesses.

Businesses can be classified according to the type of service or product that they provide. Some businesses provide a service, while other businesses sell a product. A business that provides a service is called a service business. A business that purchases a product from another business to sell to its customers is called a merchandising business. A business may make (manufacture) the product that it sells or it may sell a product that another business made. A business that makes the product that it sells is called a manufacturing business. For ex. A person who is trained in the use of computers and computer software and uses their special knowledge to provide consulting services to train and teach others for a fee of charge is in a service business. The person or organisation who buys computers and then resells those same computers to others is in a merchandising business. The person or organisation who makes all of the various parts of a computer and puts them together is in manufacturing business.

Tasks

1. Match the following users with the information needed.

1. Owners a) Whether the firm can pay its bills on time

2. Managers b) Detailed up to date information to measure business performance

and plan future operations.

3. Creditors c) To determine taxes to be paid and whether other regulations are met.

4. Government agencies d) The firms current financial condition.

2. List the six major phases of the accounting process in order (1-6) and define each.

Recording

Summarising

Reporting

Analysing

Interpreting

Classifying

3. Describe the kind of information needed by the users listed:

a. Owners (present and future)

b. Managers

c. Creditors (present and future)

d. Government agencies.

4. Match the following steps in the accounting process with their definitions.