Accounting and balance sheet

I would like to start speaking about this topic with defining what accounting is. So accounting is keeping financial records, recording income and expenditure, valu­ing assets& liabilities, elaboration of budgets and so on.

We can divide accounting into two large groups: Financial accounting and Managerial accounting. But also there are a lot of other kinds of accounting, such as: Cost accounting - working out the unit cost of products, including materials, la­bor and all other expenses.

Tax accounting — calculating an individual's or a company's liability for tax.

"Creative accounting" (or "window dressing") - using all available account­ing procedures and tricks to disguise the true financial position of a company.

1. The objectivity principle - all data recorded should be verifiable and free

from bias.

The consistency principle - the same methods (of inventory valuation, depre­ciation, must be used from one period to the next

Also at the beginning of the topic I would like to stress, that we shouldn't mud­dle accounting with bookkeeping. Bookkeeping is'just writing down (recording) all the details of transactions (debits and credits). Bookkeepers have to record every pur­chase and sale that a business makes, in the order that they take place, in journals. At a later date, these temporary records are entered in or posted to the relevant account book or ledger. At the end of an accounting period, all the relevant totals are trans­ferred to the profit and loss account..

They are in the business of supplying people with information (e. g. sharehold­ers). Even managers always need the help of accountants. They need financial statements and budgets, and cash-flow projection, and so on, to measure the success of what they've done, and to make decisions about allocating resources for future projects. They try to find a way to allocate all the overheads to different products. One of the functions of accounting is also valuing assets, which are things of value or earning power to a firm. Assets can include cash, receivables, bank deposits^ and trade investments: investments in other companies, Such assets are called current assets.

Assets including land, plant, buildings, and furniture, are called fixed assets. All the money that a company will have to pay to someone else in the future, includ­ing taxes, debts, and interest and mortgage payments is called liabilities. Long-term debts are long-term liabilities. The ratio of a firm's debt to equity is its gearing or leverage; a firm with a high proportion of debt in relation to equity is highly geared or highly leveraged. Short-term debts and debts to suppliers are among its current liabili­ties.

So the balance sheet is a document that shows the totals of money received

and money paid out by a company and the difference between them. The balance sheet includes two parts:

1. assets

2. Liabilities and share capital.

Marketable securities are a short-term investment of surplus or temporary free assets.

Normally these assets are allocated into commercial securities or federal bonds. As securities can be required at short notice they are to be easily realized and be sub­ject to price fluctuations as little as possible. The balance sheet shows their nomi­nal cost, their market value is given in brackets.

Intangibles like patents, goodwill and trademarks are not physical substances and are differently evaluated by various companies or may not be evaluated at all.

Vocabulary:

Disguise-скрывать

Budgest-бюджеты

Intangible-неосязаемый

Bias-предубеждение

Accounting-бух.учет

Asset-актив, имущество

Turnover-товарооборот

Profit-прибыль

Loss-потеря

Liability-долг, обязательство

Balance sheet - бух.баланс

Bookkeeping-бухгалтерия

1. Continue sentences:

1) At the end of an accounting period, all the relevant totals are transferred to the profit and loss...

2) Even managers always need the help of...

3) One of the function of accounting is also valuing assets, which are things of value or earning power to a...

4) All the money that a company will have to pay to someone else in the fu­ture, including taxes, debts, and interests and mortgage payments is called

2. Translate from English to Russian:

1) Bookkeeping is just writing down all the details of transactions

2) Assets including land, plant, buildings and furniture, are called fixed assets

3) Long-term debts are long-term liabilities

4) Marketable securities are a short-term investment of surplus or temporary free assets

3. Connect words in word combinations:

Balance Liabilities

Fixed Sheet

Long-term Capital

Loss Assets

Share Account

4. Answer the questions:

1) What means "window dressing"?

2) What differ have fixed and current assets?

3) What means the objectivity principle?

Date: 2016-02-19; view: 641; Нарушение авторских прав