Semester 4, Lesson 6 (51)

ACCOUNTING AND BOOKKEEPING

 

I. Read the following words and word combination and learn their meanings by heart:

Accounting [q'kauntiN] бухгалтерський облік; an accountant - бухгалтер; an account - рахунок; relevant [`relivqnt] financial data ['deitq] відповідна фінансова інформація; a financial statement - фінансовий звіт, a profit and loss account - рахунок доходів та витрат; balance sheet ['bxlqns Si:t] баланс; cash [kxS] готівка; previous [`prJviqs] попередній; revenue ['revinju:] дохід; costs [kOsts] вартість, затрати; overheads [ouvq'hedz] накладні затрати; appropriation [a,proupri'eiSn] розподіл; remains [ri'meinz] залишки; assets [`xsets] активи; fixed assets - основні засоби; current [`kArqnt] assets - обіговий капітал; liabilities [laiq'bilItiz] зобов'язання, борги, пассив (балансу); current liabilities - поточні зобов'язання; long-term liabilities - довгострокові зобов'язання; a double entry system ['dAbl'entri'sistim] система подвійного запису; bookkeeping [buk'kJpiN] бухгалтерський облік; a bookkeeper - рахівник; a purchase [`pWCIs] придбання, купівля; receipts [ri'si:ts] одержання, прибуток; disbursements [dis'bWsmant] витрата, оплата; a journal [`Gз:nq1] журнал; a Ledger ['leGq] головна книга; value ['vxlju:] вартість, a payment [peimqnt] плата, оплата; a trial [traiql] перевірка, to match [mxC] збігатись; understandable ['Andq'stxndqbl] зрозумілий; Standards [stxndqdz] of Accounting - Положення (стандарти) бухгалтерського обліку, equation [ɪˈkweɪʒən, - Sqn] рівняння, to equal ['Jkwql]дорівнювати

 

II. Try to repeat a tongue twister several times, as quickly as possible, without stumbling or mispronouncing:

Pick a partner and practice passing, for if you pass proficiently, perhaps you'll play professionally.

 

III.          Read and translate text 14:

 

TEXT 14                ACCOUNTING AND BOOKKEEPING

I

The aim of accounting is to show a financial condition of a company. It is an accounting department of a firm that records and measures all relevant financial data of its business activity. There are the two types of records which are the most important ones. They are the income statement and the balance sheet.

Who are the users of accounting records? There is a wide range of different users of these records or, as specialists often say financial reporting or financial statements. They are stockholders, present and potential investors and creditors, management, independent analysts, banks, debtors, competitors, tax bodies, government.

Accounting can be defined as recording and measuring of all financial data concerning a given business or organization activity.

Financial Statements are the central feature of accounting because they are the primary means of communicating important accounting information to users. They show business in financial terms. The most important financial documents are: 1. Profit and Loss Accounts; 2. Balance Sheets; 3. Cash flow Forecast.

Profit and loss accounts give a "history" of a company's finances during the previous year for some period.

Balance sheets show the financial position of a company on a certain date. Figuratively speaking, a balance sheet provides the so-called "a shapshot" of a company's wealth at a very given moment of time. It has three sections:

1.      Assets (fixed and current);

2.      Liabilities (current and long-term);

3.      Owner’s Equity.

If money is often referred to as "the blood of business" and accounting is referred as "the language of business", then double-entry system may be referred as "the eyes of accounting".

The double-entry system of accounting requires that for each transaction there must be one or more accounts debited and one or more accounts credited. So, the rule requires that total debits must equal total credits.

Look at the accounting equation: Assets = Liabilities + Owner's Equity.

II

Bookkeepers deal with taxes and cash flow which reflect business transactions of a company, such as sales and purchases, receipts and disbursements.

Bookkeepers first record figures in the books or journals. Of course the books of today are computer files. At the end of each period bookkeepers post the totals of each book into the Ledger.

What is the difference between accountants and bookkeepers?

As we see bookkeepers are not librarians, who also keep books. They are not bookmakers, who "make books". They are specialists who record business transactions and periodically do a trial to see if both sides of an account book match.

Accountants, however, analyze financial records and decide how to present them. It is a special art to prepare the relevant meaningful financial report from the given data. In short, accountants make financial information understandable for users.The accountant also determines ways in which the business will grow in the future. They help to expand or reorganize the business.

Many accountants pass examinations to get special certificates. In England they are called chartered accountants, while in the USA - certified public accountants.

 

 

 

IV. Retell the text according to the following questions:

1. What is the aim of accounting? 2. What two types of records do you know ? 3. What users of financial statements can you name? 4. What do financial statements show ? 5. What are the three most important financial documents ? 6. Do profit and loss accounts give "a history" of a company's finances? 7. Balance sheets show the financial position of a company on a certain date, don't they? 8. How many sections are there in balance sheets? 9. What is the essence of the double-entry system?

 

V.      Put some (7 or 10) questions to the second part of the text.

VI.    Ask so many questions as you can to the sentences:

1. Accountants deal with business transactions.

2. Accounting is referred as "the language of business".

 

VII.   Arrange the words into pairs of:

a) synonyms:

Company, examination, condition, value, position, firm, cost, to affect, part, to influence, to show, primary, to reflect, main, section, money, capital, wealth, currency, trial.

b) antonyms:

Debit, receipts, important, credit, disbursements, rarely, insignificant, poverty, purchase, sales, narrow, expense, same, wide, different, often, wealth, income.

 

VIII.  Translate into English:

1. Мета бухгалтерського обліку - показати фінансовий стан організацій.
2. Користувачами бухгалтерської інформації є інвестори, кредитори, акціонери, керівництво, банки, податкові органи, конкуренти.
3. Бухгалтерський облік - це реєстрування і обчислення всієї фінансової інформації, яка стосується діяльності певного бізнесу або підприємства.
4. Найважливішими фінансовими документами є балансові звіти, рахунки доходів і витрат та руху готівки.

5. Фінансові звіти є стрижнем бухгалтерського обліку, оскільки вони - основний засіб передачі важливої бухгалтерської інформації до споживачів. 6.Балансовий звіт показує фінансовий стан організації на певний час. 7.Система подвійного запису вимагає, щоб дебетова сторона балансу дорівнювала кредитовій стороні. 8. Рахівники записують ділові операції і періодично перевіряють,, чи обидві сторони книги рахунків співпадають. 9. Бухгалтери аналізують фінансові записи і вирішують, як їх представити, тобто вони роблять фінансову інформацію зрозумілою для споживачів. 10. Систему подвійного запису можна назвати „очима бухгалтерського обліку".

 

IX.    Match the questions with the answers:

1. Are you an accountant? 2. Do you spend your time writing down credits and debits, adding figures all days through? It seems to me rather dull. But some people like such a job. 3. What do accountants do?

a)      That's bookkeeping. Which, you know, is not the same thing at all.

b)      Yes, I am an accountant. And I am proud of it.

c)       You see, accountants record cash flows, calculate profits and losses. They also record the value of assets and liabilities. But we, accountants, do more than that. We supply people with information. We take part in a company's making of decisions.

 

X.      Read and translate the meanings of the following terms. Translate the sentences with them.

Accounting - 1) is the work of keeping or checking accounts; accountancy (syn). 2) is the work and profession of an accountant; 3) is recording the money value of business dealings.

1. She works in accounting. 2. Accounting is a system of recording the money value of business dealings and income and expenditure accounts to enable the management of a concern to see the financial position at any time. 3.In a centralized accounting system, all cash payments are made by the central accounting office. 4. Accounting malpractice toward a client can arise, for instance, when accountants present a negligently prepared financial statement to the client, and the client relies on it and is injured.

Asset - is an item of value belonging to a person or a company, such as a share, a piece of land, a building or a machine, especially if it can be sold to pay a debt.

1. The company was forced to sell off its assets. 2. His assets included shares in the company and a house in the country. 3.A sense of humour is a real asset in this business. 4. Asset, liability, and stockholders' equity accounts are permanent accounts. 5. Assets are the items of value owned by a business. 6. The total annual expenses of the asset are spread out fairly evenly over the asset's life. 7. The amount of depreciation is calculated using the asset's current book value. 8. An asset is defined as anything of value that is owned by the person, corporation, or institution in question.

Cash - 1) is money in the form of banknotes and coins; 2) is money or finance generally.

1. Small amounts are usually paid in cash rather than by cheque. 2. The company is short of cash at the moment. 3. I never carry much cash with me. 4.According to various laws, the assessed value of property for tax purposes must represent either the full fair market, or cash value of the property or a specified percentage of such value.

 

 

XI.    Read text 15 and try to fill in the gaps with the given words.

TEXT 15   DIFFERENCE BETWEEN A BOOK-KEEPING AND AN ACCOUNTING, A BOOK-KEEPER AND AN ACCOUNTANT

Words: Decision-making, years, a book-keeper, department, transactions, analysing, recording, months, accounting, management, repeated, financial, weeks, knowledge

Some people confuse a 1)     with an accountant and book-keeping with
2)        .Meanwhile the distinction between them is significant enough. Book-keeping is one of the parts of the whole of accounting. It can be defined as the procedure used in 3)             business 4)            . Book-keeping requires only minimal 5)       of accounting. In fact, it is the routine and clerical side of accounting. A book-keeper is known to record 6)           and uncomplicated transactions of business. In contrast the accountant is a professional who is competent in 7)       accounting information, systems design and
8)              advising. An accountant uses accounting experience to help the
9)            in 10)            . As for the book-keeper, his function is that of a clerk working in a finance 11)          . A person might become a proficient book-keeper in a few 12)           or 13)           . To become a professional accountant, however, is a far greater challenge. It requires 14)         of study and experience.

 

XII.   1. Complete the table writing down the main features of an accountant and a bookkeeper. Use information from Ex. III, VIII, X, XI.

 

An Accountant

A Bookkeeper

1. analyzes financial records and decides how to present them…

1.  records figures…

 

XIII.  Individual work: read text 16 and answer the following question “What is the difference between an accountaning and bookkeeping?”

TEXT 16                 

Am I an Accountant or a Bookkeeper?

This is a common question we can  hear from individuals performing day-to-day financial services for a company. Most people, even accountants, don't know the answer to this question. And, in most cases the answer doesn't matter. But, in those cases where someone wants to be technically correct the answer lies in what services a person performs. If a person is doing bookkeeping, they are a bookkeeper. If they are doing accounting, they are an accountant.

What is Bookkeeping?

There are eight steps to the bookkeeping cycle. A bookkeeper is a person that performs one or more of these steps or sometimes called AAT (accounting technicians). In large companies, for instance, the bookkeeping cycle might be divided into departments such as Accounts Receivable, Accounts Payable, or Payroll. While most often these people are referred to as "clerks", they might also be considered bookkeepers as they are "keeping the books" for a company. In small companies, the bookkeeper may perform the entire bookkeeping process, or might just enter data to give to the "accountant".

All bookkeeping steps are mechanical in nature. Bookkeeping is a regimented process usually occurring in monthly cycles consisting of entering transactions into the journals, making adjustments, and preparing reports. The Accounts Receivable Clerk may be assigned to enter all sales on account, and all payments from the customers. The Accounts Payable Clerk's responsibility would be to enter purchase orders and checks. Again, in a small company, both duties may be performed by the same person.

The full-charge bookkeeper is someone who can do it all - including compiling the data into the General Ledger and preparing financial statements.

What is Accounting?

Someone has to set up the bookkeeping system, monitor it, and interpret the results. These processes are called "Accounting." The accounting process is much less mechanical and more subjective. It begins with designing a system that will benefit the business, by capturing the financial information in a useful manner without being overly burdensome to the bookkeeper. Once set up, the accountant monitors the system to ensure it's doing what it's supposed to do. And finally, on a monthly basis usually, the accountant presents the financial statements to the business management in such a way that decisions can be made.

Since accounting requires an understanding of the bookkeeping process, accountants typically supervise the bookkeepers. In a large corporation there may be several, possibly even thousands of accountants. One will be designated as the "Controller" who oversees the entire accounting and bookkeeping system.
In a small business, one person, often a freelancer (a contract accountant or full charge bookkeeper) will perform all the phases of accounting and bookkeeping for a company. Since "Accountant" is the more prestigious title, most small business jack-of-all-trades call themselves an "Accountant".