Accounts payable - счета к платежу
Current and fixed assets – оборотные и основные фонды
Exercise1. Give definitions to the following terms:
- Assets are …
- Liabilities are …
- Owners’ equity is…
- A balance sheet is …
- A balance sheet provides …
- An accounting equation is …
- Current assets are…
- Fixed assets are …
WHAT IS ACCOUNTING?
Accounting has been called “the language of business”. Perhaps a better term is “the language of financial decisions”. The better you understand the language, the better you can manage the financial aspects of living. Personal financing planning, investments, loans, car payments, income taxes, and many other aspects of daily life are based on accounting. A recent survey indicates that business managers believe it is more important for college students to learn accounting than any other subject. Other surveys show that persons trained in accounting and finance make it to the top of their organizations in greater numbers than persons trained in any other field. Indeed, accounting is an important subject.
Accounting is the system that measures business activities, processes that information into reports and communicates these findings to decision makers. Financial statements are the documents that report on an individual’s or an organization’s business in monetary amounts.
Is our business making a profit? Should we start up a new line of women’s clothing? Are sales strong enough to warrant opening a new branch outlet? The most intelligent answers to business questions like these use accounting information. Decision makers use the information to develop sound business plans. As new programs affect the business’s activities, accounting takes the company’s financial pulse beat. The cycle continues as the accounting system measures the results of activities and reports the results to decision makers.
Bookkeeping is a procedural element of accounting as arithmetic is a procedural element of mathematics. Increasingly, people are using computers to do much of the detailed bookkeeping work at all levels – in households, business, and organizations of all types.
Ответьте на следующие вопросы к тексту:
Why has accounting been called “the language of financial decisions”?
Why is it more important for college students to study accounting and finance?
What are financial statements?
Why accounting information is so necessary for managers (decision-makers)?
What is the difference between accounting and bookkeeping?
Users of Accounting Information
Individuals. People use accounting information in day-to-day affairs to manage their bank accounts, to evaluate job prospects, to make investments, and to decide whether to rent or to buy a house.
Businesses. Managers of businesses use accounting information to set goals for their organizations, to evaluate their progress toward those goals, and to take corrective action if necessary. Decisions based on accounting information may include which building and equipment to purchase, how much merchandise inventory to keep on hand, and how much cash to borrow.
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Investors and Creditors. Investors provide the money that businesses need to begin operations. To decide whether to help start a new venture, potential investors evaluate what income they can reasonable expect on their investment. This means analyzing the financial statements of the new business. Those people who do invest monitor the progress of the business by analyzing the company’s financial statements and by keeping up with its developments in the business press, for example, The Wall Street Journal, Business Week, Forbes, and Fortune.
Ответьте на вопросы:
- Who are users of accounting information?
- Why do they use it?
Read the text and answer the following questions:
How old is accounting?
What century does it date back?
3. When did the main bookkeeping terms appear such as "double entry
bookkeeping", "income",
4. What does the words "debit" and "credit" mean?
When and why were developed more complicated accounting systems?
6. Why is term "data processing" associated with bookkeeping?
The Development of Accounting Thought
Accounting has a long history. Some scholars claim that writing arose in order to record accounting information. Account records date back to the ancient civilizations of China, Babylonia, Greece, and Egypt. The rulers of these civilizations used accounting to keep track of the cost of labour and materials used in building structures like the great pyramids.
Accounting developed further as a result of the information needs of merchants in the city-states of Italy during the 1440s. In that commercial climate the monk Luca Pacioli, a mathematician and friend of Leonardo da Vinci, published the first known description of double-entry book-keeping in 1494.
The double-entry accounting system - in which for every "debet dare" there is a "debet habere" - has evolved to the point where it is very much like the present day system. Debet dare and debet habere are Latin terms meaning "should give" and "should have" respectively.
The pace of accounting development increased during the Industrial Revolution as the economies of developed countries began to mass-produce goods and increased competition required merchants to adopt more sophisticated accounting systems.
In the 19th century, the growth of corporations, especially those in the railroad and steel industries, spurred the development of accounting. Corporation owners -the stockholders- were no longer the managers of their business. Managers had to create accounting systems to report to the owners how well their businesses were doing.
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The role of government has led to still more accounting development. When the federal government started the income tax, accounting supplied the concept of "income". Also, government at all levels has expanded its role in health, education, labour, and economic planning and it required strict accountability and compliance with standards in the business community.
Since the mid—20lh century bookkeeping as an essential part of all accounting systems has been carried out by machines. The introduction of computers broadened the scope of bookkeeping and the term "data processing" now often associates with bookkeeping.
Exercise. Complete the following sentences according to the text .