Text A ACCOUNTING AND BOOKKEEPING

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. It is the income statement, on the one hand, and the balance sheet, on the other hand.

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.

Let us consider the most important terms and definitions in " counting. To begin with, accounting can be defined as recording and measuring I all financial data concerning a given business or organisation activity.

Financial Statements are the central feature of accounting because they me the primary means of communicating important accounting Information to users. They, so to say, 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. They have three sections:

1. Trading section. It shows the revenue from sales and the costs in producing those sales.

2. Profit and loss section. It shows the costs of general overheads such as administration and distribution.

3. Appropriation section. It shows how the received profit is distributed to shareholders and how much profit remains as reserves.

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

1. Assets (fixed and current);

2. Creditors (current and long-term liabilities);

3. Capital and Reserves (company's issued share capital);

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. After all, the rule requires that total debits must equal , total credits, j

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

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.

The difference between accountants and bookkeepers.

So, what is the difference?

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, analyse 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.

Ill INTERNAL AUDITING

Internal auditing is an independent, objective assurance and consulting activity designed to add value and improve an organization's operations. It helps an organization accomplish its objectives by bringing a systematic, disciplined

approach to evaluate and improve the effectiveness of risk management, control, and governance processes.

Internal auditing reviews the reliability and integrity of information, compliance with policies and regulations, the safeguarding of assets, the economical and efficient use of resources, and established operational goals and objectives. Internal audits encompass financial activities and unions including systems, production, engineering, marketing, and inn resources.

A look at today's internal auditing profession reveals a "process" that brings more value to the organization than ever before. For instance, internal auditors now play a vital role in steering committees and strategic planning groups throughout the organization and help raise awareness of risks before they become problems. In essence, today's internal auditors and the services they provide are critical to the very survival of the organization.

The challenges in the profession of internal auditing reflect the challenges prevalent in today's business realm. Global competition, downsizing, re-engineering, security risks of advanced technology, and the effects of the economy are just a few of the factors that create new challenges for auditors. They must also consider such issues as ethical behavior, efficiency of systems, and compliance with regulations.

Internal auditors respond to these challenges by making recommendations to increase efficiency and implement the latest techniques for ensuring control. They may also suggest money-saving changes and propose cost-effective strategies to minimize risk.

Internal auditors always play a vital role in ensuring that an organization is efficiently run, morally sound, technologically advanced, cognizant of the environment and other areas of concern, and safe from unnecessary risk.

Internal auditing's increasingly diverse and challenging roles relative to internal control and governance make the internal auditing profession an inviting career option. Successful individuals in today's broad arena of the internal auditing profession are committed to the task of continually improving organization performance. Working in partnership with management, internal auditors can provide a wide assessment to the risks and implications of audit findings and ultimately make a tremendous difference in the success of an organization.

Questions to part I

1. What is the aim of accounting?

2. What two types of records do you know?

3. What users of financial statement 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. Do you know the essence of the double-entry system? What is it?

№ 3. Put questions to part II and III. Retell the texts. Find in Part III English words and word combinations on accounting and paraphrase them.

Questions and Answers

1. Are you an accountant?

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

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

2. Yes, I am an accountant. And I am proud of it

3. What do accountants do?

3. 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

№ 5. Translate from English into Ukrainian in written form.

Assets	= Liabilities	+ Owner's Equity
Debit for Increases	Credit for Decreases	Debit for Decreases	Credit for Increases	Debit for Decreases	Credit for Increases

Sale of an asset on credit

On 10 May 20.. goods which had cost $100 were sold to J Brown for the same amount, the money to be paid later. The effect is a reduction in I he stock of goods and the creation of a new asset. A person who owes the firm money is known in accounting language as a debtor. The balance sheet now appears:

В Blake

Balance Sheet as at 10 May 20..
Assets	$	Capital and liabilities	$
Buildings		Capital
Stock of goods		Creditor
Debtor
Cash at bank
TOTAL

III

The purchase of an asset and the incurring of a liability

On 6 May 20.. Blake buys some goods for $500 from D Smith, and agrees to pay for them some time within the next two weeks. The effect of this is that a new asset, stock of goods, is acquired, and a liability for the goods is created. A person to whom money is owed for goods is known in accounting language as a creditor.

В Blake

Balance Sheet as at 6 May 20..
Assets	$	Capital and Liabilities	$
Buildings		Capital
Stock of goods		Creditor
Cash at bank
TOTAL

Sale of an asset for immediate payment

On 13 May 20.. goods which had cost $50 were sold to D Daley for the same amount, Daley paying for them immediately by cheque. Here one asset, stock of goods, is reduced, while another asset, bank, is increased. The balance sheet now appears:

В Blake

Balance Sheet as at 13May 20..
Assets	$	Capital and liabilities	$
Buildings		Capital
Stock of goods		Creditor
Debtor
Cash at bank
TOTAL

GRAMMAR

The Past Continuous Tense

to be (was, were) + Participle I

It is used to denote an action going on at a given moment in the past. The given moment may be expressed:

1) by the definite time (yesterday, at 5 o'clock);

2) by another past action with a verb in the Past Indefinite or by an adverbial phrase. It is also used:

3) to denote a continual process in the past (after the phrases "the whole day", "all day through" or the like phrases);

4) to denote an action thought of as a continual process (with "always", "ever");

5) to express two actions were in progress at the same time.

Exercises № 6. Translate the sentences into Ukrainian. Define different meanings of the Past Continuous Tense.

1. The old woman was always complaining of being lone.

2. While Mary was recording the new data we were calculating our receipts.

3. All week through our company was looking for this type of computer to purchase.

4. The day before yesterday at 3 o'clock some Mr. Foxer from tax bodies was calling our senior manager.

5. When I returned she was still calculating overheads.

Remember the form and functions of Participle I

Form	Functions	Examples
Infinitive + ing	An attribute	The director knows about the increasing liabilities of his firm
A Part of Complex object	I saw him looking through the profit and loss account
An Adverbial Modifier	Speaking with our shareholders they found out this fact
A Part of the Predicate	He was consulting a dictionary when we entered the room