B. Say whether the following statements are true, false or there is no information on the subject of the text

1) This basic equation is a kind of practice behind the double-entryaccounting system.

2) Accrual Concept states that all revenue transactions are recorded when the cash doesn’t change hands.

3) The liabilities are recorded when they are actually paid.

4) The accounting method can be changed if there is a valid business reason.

5) Accruals and prepayments are adjustments we need to make the accounts at the end of the year.

6) Any liability that might occur should be recorded and at the higher possible amount.

7) The accounting focuses on immaterial facts that are to determining revenues.

8) Nonmonetary liabilities are obligations not payable in money, such as those payable in services or those that will adjust an expense (i.e. deferred income tax credit).

9) If the accountant determines that the business is viable then it should be stated in the financial statements.

Text 5 China's Export Machine Goes High-End

From its sprawling manufacturing base deep in China’s southwestern Hunan province, some 100 kilometers from where Mao was born, construction-machinery maker Sany Group plans to take on the world. While workers in blue overalls and yellow hard hats crawl over huge mobile hydraulic cranes and cement mixer trucks in a gleaming factory, Sany President Tang Xiuguo sits in his expansive office nearby, discussing the opening of Sany factories in Brazil, India, and Alabama, as well as the soon-to-be-completed $475 million acquisition of Germany’s Putzmeister, the world’s largest maker of cement pumps. The bespectacled Tang, one of four founders of the 22-year-old company, aims to lift overseas sales, now some 5 percent of its $16 billion revenue, to up to one-fifth of revenues within five years.

The phrase “Made in China” summons up images of cheap shoes, plastic toys, and electronics assembled in the vast factory complexes of Foxconn Technology Group (HNHPF). While China built its powerful export business—increasing 17 percent a year over the last three decades—on such light industry and electronics assembly, that is fast changing. Rising labor costs, up 15 percent annually since 2005, plus an appreciating currency, are putting new pressures on China’s cheap manufacturing model and driving textile, shoe, and apparel factories to close or relocate to Vietnam, Cambodia, or Bangladesh. “China’s share of the world’s low-end exports has started to fall. This reflects a shift by Chinese producers into sectors where margins are higher rather than a failure to compete,” wrote U.K.-based Capital Economics in a March 28 note.

Chinese-built ships, for example, dominated the global market with a 41 percent share last year, well ahead of South Korea and Japan, according to London-based shipping services company Clarksons. Data from the International Trade Centre, a joint agency of the United Nations and the World Trade Organization, also show strong gains in China’s global share of the markets for railway locomotives and wagons, machinery, and industrial boilers. In construction machinery, Sany’s specialty, three Chinese companies (Sany included) now rank in the top ten globally. Many of the new exporters are producing from inland China, rather than the coast, the traditional region for manufacturing.

Overall, the portion of China’s exports made up by heavy industry, about two-thirds of which is machinery, has grown from 29 percent in 2001 to 38.7 percent last year, surpassing light industry and electronics, according to Beijing-based economics consultants GK Dragonomics. “They are making different products with higher technology, things they can charge more money for,” says Andrew Batson, GK Dragonomics’ research director, who estimates that the new industries can help lift China’s share of global exports from 10 percent now to 15 percent by 2020. “The typical Chinese exporter is not a shoe factory in Guangdong anymore. Instead it is some kind of equipment or machinery maker.”

The Chinese makers of this machinery are targeting India, South America, and the Middle East, as Europe, still China’s largest export market, struggles with its debt crisis. Europe, the U.S., and Japan accounted for 48 percent of China’s total exports last year, down from 56.1 percent in 2003, with developing countries now taking the majority, says Louis Kuijs, an economist at the Hong Kong-based Fung Global Institute. “We have an advantage because our technology and our products level are more suitable for these countries,” says Sany’s Tang. “And our price is a bit lower than other international brands.”

Policy makers have made upgrading industry a national priority. Equipment manufacturing, shipbuilding, and cars are among the industries slated to receive $2.5 billion from the government this year to improve technology and product quality. Mergers and acquisitions inside China and overseas are also being encouraged. Says Shao Ning, vice minister of the powerful State-Owned Assets Supervision and Administration Commission of the State Council: “Our position is we support Chinese companies investing abroad.”

While China’s new manufacturers are not competing in developed markets yet, already they are challenging Caterpillar (CAT), Siemens (SI), General Electric (GE), and other established equipment makers in places like South America and Russia. China’s construction-machinery industry is expected to overtake Japan’s and Germany’s soon, making it the world’s second-largest exporter in the category, behind the U.S.

Winning market share in the U.S. and Europe could take years, in part because of concerns over Chinese quality (the crash of a Chinese-built high-speed train in Zhejiang province in July hurt China’s reputation as a manufacturer). Sany says it spent $240 million last year upgrading its factories, including the installation of welding robots. As Sany expands overseas, it aims to improve its products to match the quality achieved by its newest acquisition, Germany’s Putzmeister, which will share engineering know-how and suppliers with its Chinese parent. Says Tang, “We know that ‘Made in China’ doesn’t have a great reputation. We want to change this through selling high-quality products.”

The bottom line: Chinese exports have been rising 17 percent a year on average. To keep that pace, China is trying to grab market share in high-end machinery.

Notes

low end - низкая цель

welding robots – сварочное оборудование

high-end - мощный, профессиональный, высококачественный; высокого класса; с широкими функциональными возможностями

A. Think over appropriate translation of the following expressions:

to take on the world, the soon-to-be-completed acquisition, to lift overseas sales, to put new pressures, low-end export, to show strong, to surpass, to account for, to take the majority, to be encouraged, to grab market share, high-end machinery

B. Over to you.

v What ways can you suggest to China’s producers in order to improve technology and product quality?

v Do you believe that China’s construction-machinery industry may overtake Western companies? Give your opinions.

v Look through the internet sites concerning international trade. Make a report on Russian products prospective in export market.

Text 6 How is gold used as an international investment?

Gold is bought and sold around the world in almost every market and currency imaginable: with Egyptian pounds in a Cairo souk, or with dollars on the commodity exchanges of Hong Kong or Chicago. Although some gold trading is based on commercial transactions, such as an Amsterdam jeweler buying gold for inventory, most gold is purchased as an investment.

Gold investors range from powerful central banks who use gold to shore up their currencies to individuals who buy gold hoping that it will hold its value in inflationary times. Gold’s role has changed over the years. Before banks and securities houses became part of the electronically interconnected global economy, gold served as a “liquid” investment that could be exchanged anywhere in the world at any given time. Now gold is perceived mostly as a “hedge” – providing a stable refuge for investors in highly inflationary times when financial instruments such as stocks or bonds tend to lose their value. When inflation is brought under control, however, gold tends to lose its luster because, unlike most other investments, there is no interest paid on gold. The only possible profit is its rise in value, called capital gain.

There are several ways of investing in gold, including buying shares in gold mining companies or gold mutual funds. Most gold instruments, however, are “spot” purchases for immediate delivery to a custodian bank that holds precious metals for the investors. Purchases are made on commodity exchanges such as a Comex in New York, or in most international banks such as Credit Suisse in Zurich where trades are executed electronically for clients around the world.

Instead of buying “spot” gold for immediate delivery, however, investors can also make an agreement to buy gold at a future date. These are called futures contracts. Tailor-made futures contracts, with flexible dates to fit the needs of buyers and sellers, are called forward contracts.

Spot and the futures prices, like a child riding piggyback, tend to move in the same directions, rising and falling with other precious metals in the market. If gold’s spot price increases, its futures price usually rises by the same amount. In general, the prices of precious metals such as gold, silver, and platinum tend to rise and fall together.

A. Complete the sentences according to the information in the text.

1) Most gold is purchased as… .

2) Powerful central banks use gold to… .

3) There are several ways of investing in gold… .

4) Instead of buying “spot” gold for immediate delivery investors can also make an ….

B. True or false?

1) Nowadays gold serves as a “liquid” investment that can be exchanged anywhere.

2) Futures contracts are based on periodic delivery dates in the future.

3) Spot and futures prices tend to move in the same directions, rising and falling with other precious metals in the market.

4) The prices of precious metals such as gold, silver and platinum tend to rise and fall together.

Text 7 Checking out

There is much about British life that puzzles foreigners, but little is more perplexing than the discovery that most Britons do not pay fees on their current accounts. “It's uniquely British,” says Philip Middleton, a banking expert at Ernst & Young, an accounting firm.

But now this cherished free banking for customers who keep their current accounts in credit is under threat. First Direct, an internet-and-telephone bank, last week unveiled plans to start charging customers £10 ($19) a month for running their current accounts. The charge will affect only the minority of customers who do not hold a minimum balance of £1,500 or who deposit less than that each month, and it can be avoided by signing up for any of the bank's other products. However, the decision was still greeted with howls of protest and dire warnings that other lenders would follow suit.

Nationwide, the country's biggest mutually-owned mortgage lender, soon obliged, saying First Direct's fee was a “nail in the coffin” for free banking, while opportunistically suggesting that it too might be forced to introduce charges. Consumer groups and politicians, meanwhile, said that banks' poorer customers would be especially hard-hit.

Yet amid the outrage few paused to note two key facts. First, consumer banking is anything but free. Second, the poor already bear a disproportionate share of banking charges.

Banking appears free because, since the early 1980s, banks have cut a deal with their customers to waive transaction fees in exchange for paying paltry rates of interest on balances held in current accounts. But the real price of these accounts is the £40-60 that the typical customer forgoes each year in interest.

Even that is barely enough to make current accounts profitable, says Mark Weil of Mercer Oliver Wyman, a consulting firm. Banks make their money from selling other services and by imposing charges that are less visible to customers and thus subject to less competition. Most of these fees are paid by banks' less well-off customers, industry insiders say, because they are the ones who miss card payments, exceed credit limits or buy loan-payment insurance. The industry has become rife with cross-subsidies, says Mr Weil.

The Office of Fair Trading, a competition regulator, has recently ruled that last year banks wrongly collected more than £300m in credit-card fees levied on customers who missed payments or exceeded credit limits. It has forced banks to cap their charges at £12 a payment, compared with the £25-30 that had been typical in the industry. It is now probing similar charges on current accounts and is also casting a beady eye at the price of loan insurance. It reckons a more competitive market for this cover could cut the cost to consumers by about £1 billion a year.

But capping particular fees may not benefit consumers as a whole since banks can raise prices elsewhere. That is already happening. PricewaterhouseCoopers, an accounting firm, reckons 19 credit-card providers raised their lending rates in the months immediately after the OFT capped penalty rates.

Imposing price controls and mandating products is a sure way to reduce the competition that has already delivered clear benefits to consumers in Britain, who enjoy cheaper banking than in other big economies. Customers in America, Italy and Germany pay almost twice as much each year to transact with their banks, according to a 2005 study by Capgemini, a consulting firm. It may seem counter-intuitive, but the biggest winners from the demise of free banking may be the poor.

CONTENTS

UNIT 1 Organizations Types of Businesses Alliances Management
UNIT 2 Marketing Marketing Marketing Mix Advertising
UNIT 3 Finance Investments Banking Accounting
UNIT 4 Global Forces Globalization International Trade Business Correspondence
GRAMMAR
ADDITIONAL READING