Vocabulary

Part II

to make money entry salary rent to advertise travelling expense insurance full time work to engage external accountant finance to affect to suffer a loss

to make a profit. one item in a list. payment for regular work. regular payment for the use of land, shop etc. to make known to people. spending of money during travels. an offer by a company to safeguard against loss in return for regular payments. a normal day’s work for one employer. to employ. an accountant checking accounts for a company on a part-time basis. the capital of an organization. to cause the happening of something. to meet with a loss, such as in business.

Explanations

Part III

Grouping entries. Under the double entry system, expenses incurred on different dates on a certain item such as transport, are grouped under that account in the ledger. This makes it possible to total the expenses on the item for a month.

Entry. It is an item noted in an account book.

Bookkeeping by double entry is a system by which each item is entered

twice in a ledger.

To finalise accounts. To give accounts a final form after obtaining the balance for each account for the financial year.

Financial year. This is the annual period for which accounts are prepared. It may start with any date and cover twelve months but many businesses prefer it to coincide with the calendar year.

Income tax. It is a tax payable by a person or company for net income earned in a year. The rate of an income tax differs for the individual and the company.

Company law. It is the law contained in the Companies Acts and regulates the formation, registration and operation of companies. It specifies the requirements on the appointment of directors, their duties, the issue of shares, the holding of meetings etc.

Exercises

1. Answer the following questions.

   1. Why do companies keep accounts?

   2. In what account book are entries grouped?

   3. What are some of the expenses of a company?

   4. What work does the external accountant do?

   5. What is the rate of tax on the net profit of a company?

2. Give the meanings of the following words.

   1. Entry. 2. To affect. 3. To engage. 4. To advertise. 5. Full time work.

3. Give the word that fit the description.

   1. Payment for regular work.

   2. Spending of money during travels.

   3. The capital of an organisation.

   4. Regular payment for the use of land, shop etc.

   5. An offer by a company to safeguard against loss in return for reular payments.

Lesson 10

Correspondence in business

Part I

In every business there will be a need to correspond. Customers may enquire about goods and services or even make complaints in writing. A shopkeeper may want to place an order for goods. A printer may require spare parts for his printing press. These requirements can be met by an exchange of letters.

The ten parts of a business letter include date¹, reference², inside address³, salutation⁴ , subject-heading⁵ , body of the letter⁶ , complimentary ending⁷ , signature⁸ , firm title⁹ and a note relating to enclosure¹⁰

Universal Commodities (Pte) Ltd 72 Upper Russles Street London WC 2A 3UA date reference inside address salutation subject heading body of letter complimentary ending signature firm title note relating to enclosures

Layout of a business letter

There are several types of business letters. They include letters of introduction, applications, order letters, letters of complaint, letters of compliment and telegrams. A good business letter should be accurate and be written in good English. It must be brief and courteous. The correct postage must be paid by the use of stamps. For extra safety a letter may be dispatched by registered post.

The correspondents of two companies may know each other only through letters. The impressions of these counterparts will be based on the letters they receive. Letters ought to be courteous and well written at all times.

Letters help in the search for new business. Like a successful salesman, a letter must look attractive. Its contents should be neat and well arranged. Good quality paper should be used for the letterhead and envelope.

It is courteous to answer letters promptly. For speedy dispatch letters and parcels may be sent by air. Some offices send messages by telex. Telegrams and telex messages have to be short and to the point. However it may be difficult to understand them if they are devoid of details. Therefore they should be carefully worded and then transmitted.