Exercise 1

Use this a working list and add other terms with which you are unfamiliar:

NOUNS	VERBS	ADJECTIVES	OTHERS
process condition asset property liability owners’ equity accounting equation inventory ____________ ____________	own owe represent equal express list detail ____________ ____________	particular receivable monetary current payable long-term ____________ ____________	internally ____________ ____________

Exercise 2

A. Substitute appropriate terms for the underlined words or phrases in the sentences below:

status agencies monitored maintain independently

procedure fee hire rigorous solely

1. Many accounting departments have strict entrance require­ments; only the most qualified applicants are allowed to enter these programs. ________________

2. The particular method used to process employee insurance claims may vary from company to company. ________________

3. The stock market is closely watched every day. ________________

4. Rather than expand into foreign lines, the dress shop manager chose to deal only with domestic fashion design­ers. ________________

5. Although the consultant's charge for services was high, his guidance and advice were well worth the money. ________________

6. The financial condition of a company is reflected in its financial statements. ________________

7. When the business began to expand, a second bookkeeper was brought in to help keep the books. ________________

8. In the United States there are numerous organizations that provide services at the local, state, and national lev­els. ________________

Exercise 3

Fill in the blanks with noun, verb, or adjective forms. Use your dictionary if necessary:

NOUNS	VERBS	ADJECTIVES
1. ____________ 2. ____________ 3. ____________ 4. ____________ 5. ____________ 6. ____________ 7. ____________ 8. ____________	communicate __________ interpret reflect allow fulfil __________ maintain	________________ informed/informative ________________ ________________ ________________ ________________ standardized/standard ________________

Why finance

One of the primary considerations when going into business is money. Without sufficient funds a company cannot begin operations. The money needed to start and continue operating a business is known as capital. A new business needs capital not only for ongoing expenses but also for purchasing necessary assets. These assets — inventories, equipment, buildings, and property — represent an investment of capital in the new busi­ness.

How this new company obtains and uses money will, in large measure, determine its success. The process of managing this acquired capital is known as financial management. In general, finance is securing and utilizing capital to start up, operate, and expand a company.

To start up or begin business, a company needs funds to purchase essential assets, support research and development, and buy materials for production. Capital is also needed for salaries, credit extension to customers, advertising, insurance, and many other day-to-day operations. In addition, financing is essential for growth and expansion of a company. Because of competition in the market, capital needs to be invested in developing new product lines and production techniques and in acquiring assets for future expansion.

In financing business operations and expansion, a business uses both short-term and long-term capital. A company, much like an individual, utilizes short-term capital to pay for items that last a relatively short period of time. An individual uses credit cards or charge accounts for items such as clothing or food, while a company seeks short-term financing for salaries and office expenses. On the other hand, an individual uses long-term capital such as a bank loan to pay for a home or car — goods that will last a long time. Similarly, a company seeks long-term financing to pay for new assets that are expected to last many years.

When a company obtains capital from external sources, the financing can be either on a short-term or a long-term arrange­ment. Generally, short-term financing must be repaid in less than one year, while long-term financing can be repaid over a longer period of time.

Finance involves the securing of funds for all phases of business operations. In obtaining and using this capital, the decisions made by managers affect the overall financial success of a company.