Some scholars assume that writing appeared because it was necessary ...

2. In 1440s they were... who developed accounting further as a result of
information needs.

The first known description of double-entry book-keeping was made by... in

Debit and credit today were originated from Latin words... which mean...

5. More sophisticated accounting systems appeared during... when developed
countries began...

6. In the 19^th century managers had to develop accounting systems...

7. Strict accountability and many accounting terms, such as "income", for
example, were supplied because...

8. Since the mid- 20^th century bookkeeping... and the introduction of computers...

 

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Accounting

Accounting shows a financial picture of the firm. An accounting department records and measures the activity of a business. It report on the effects of the transactions on the firm financial condition. Accounting records gives a very important data. It is used by management, stockholders, creditors, independent analysts, bank and governments.

Most businesses prepare regularly the two types of records. That is the income statement and balance sheet. These statements show how money was received and spent by the company.

One major tool for the analysis of accounting records is ratio analysis. A ratio analysis is the relationship of two figures. In finance we operate with three main categories of ratios. One ratio deals with profitability, for example, the return on Investment Ratio. It is used as a measure of a firms operating efficiency.

The second set of ratios deals with assets and liabilities. It helps a company to evaluate its current financial structure of the company. It analyses the value of the ownership of the firm.

Notes to the text

Ratio analysis анализ коэффициентов

Profitability прибыльность

Return on investment ratio коэффициент возвращения инвестиций

Answer the questions:

1. What is the purpose of accounting?
2. Who used the data provided by accounting firm?
3. What are the two types of records which most businesses prepare?
4. What can you know analyzing the income statement and balance sheet of a company?
5. What is the purpose of the ratio analysis?
6. What categories of ratio in finance do you know?

Vocabulary Exercise

1. An accounting helps … the activity of a business. 2. Do you know the effect of you last … on financial condition of the firm. 3. Accounting records provide … for stockholders, independent analysts. 4. The second type of ratio helps the company … its current financial position. 5. … is one of the two main records which most of the businesses prepare regularly. 6. The … of the company includes real estate in California. 7. I am sure of the … of this transaction. 8. Our company’s current … is very high. 9. They … from the association with that corporation.

to profit profit efficiency ownership to evaluate transaction data income statement to measure

BOOKKEEPERS, ACCOUNTANTS AND CONTROLLERS

Bookkeepers deal in taxes, cash flow, which includes cash receipts and cash disbursements, sales, purchases and different business transactions of the company.

Bookkeepers first record all the appropriate figures – in the books of original entry, or Journals. At the end of a period usually a month – the totals of each book of original entry are posted into the proper page of the Ledger. The Ledger shows all the expenditures and all the totals of each account in the Ledger. The bookkeeper prepares a Trial Balance. Trial Balances are usually drawn up every quarter.

The accountant’s responsibility is to analyze and interpret the data in the Ledger and the Trial Balance.

The accountant is to determine the ways in which the business may grow in the future. No expansion or reorganization is planned without the help of the accountant. New products and advertising campaigns are also prepared with the help of the accountant. The work of accountants is rather sophisticated after they pass examinations in Institute of Accountants. Certified accountants in England are called chartered accountants. In the USA the certified accountants are called certified public accountants. But it is not necessary to have a certificate to practice accounting. Junior employees in large companies, for example, often practice accounting and then take examinations. The chief accounting officer of a large company is the Controller, or Comptroller.

Controllers are responsible for measuring the company’s performance. They interpret the results of the operations, plan and recommend future action. This position is very close to the top executives of the company.

Notes to the text: