Text 4 the types and the titles of accounts

Exercise 4.1

Study the vocabulary:

	retrieval of information		пошук інформації
	a filing system		система реєстрації (підшивки) документів
	to require		потребувати
	a title		заголовок
	a resemblance		подібність, схожість
	Asset Accounts		рахунки активів
	Liabilities Accounts		рахунки пасивів
	Owner's Equity Accounts		рахунки власного капіталу
	a chart of accounts		список (реєстр) рахунків

Exercise 4.2

Read and translate the text:

1. When large amounts of data are gathered in the measurement of business transactions, a method of storage and retrieval of information is required. In other words, there should be a filing system to sort out or classify all the transactions of a business. Only in this way can financial statements and other reports be prepared quickly and easily.

2. This filing system consists of accounts. An account is the basic storage unit for data in accounting. In its simplest form an account has three parts: a title that describes the asset, liability, or owner's equity account, a left side, which is called the debit side, and a right side, which is called the credit side. This form of the account, called a T account because of its resemblance to the letter 'T', is used to analyze transactions. It appears as follows:

Title of Account
Left or Debit Side	Right or Credit Side

Thus any entry made on the left side of the account is a debit, or debit entry, and any entry made on the right side of the account is a credit, or credit entry. The terms debit (abbreviated Dr, from the Latin debere) and credit (abbreviated Cr, from the Latin credere) are simply the accountant's words for left and right.

3. There are different types of accounts. The most commonly used ones are as follows: Asset Accounts, Liabilities Accounts and Owner's Equity Accounts. In a manual accounting system each account is kept on a separate page or card. These pages or cards are placed together in a book or a file. This book or file, which contains all groups of the company's accounts, is called a ledger. In a computer system, which most companies have today, the accounts are maintained on magnetic tapes or discs. However, as a matter of convenience, the accountant still refers to the group of company accounts as the ledger. To be able to find an account in the ledger easily and identify accounts when working with accounting records, accounts are numbered. A list of these accounts is usually called a chart of accounts.

4. Different companies have different charts of accounts. Every company develops a chart of accounts for its own needs. The specific accounts used by a company depend on the nature of the company’s business. A steel company will have many equipment and inventory accounts, whereas an advertising company may have few. Each company must design its accounts in a way that reflects the nature of the business and the needs of its management in directing that business.

Exercise 4.3

Read the text again and choose the best variant:

1. A method of storage and retrieval of information is necessary in the...

a) amount of business contacts

b) quantity of commercial relations

c) measurement of business transactions

2. Financial statements and other reports can be prepared quickly and easily only when there is…

a) a system of sorting out of some transactions in a business

b) a filing system to sort out or classify all the transactions of a business

c) sorting out or classification of all the operations in a business

3. The basic storage unit for data in accounting is…

a) a title

b) a debit side

c) an account

4. A ledger is a book which contains all groups of…

a) Asset Accounts

b) the company's accounts

c) Owner's Equity Accounts

5. The specific accounts used by a company depend on…

a) nature of the company’s business

b) the accounts used in the country of business

c) the size of the company

Exercise 4.4

Fill in the gaps from the table. Then read and translate:

Form; amounts; transactions; resemblance; title; credit; financial; retrieval; accounts; classify

1. When large …1… of data are gathered in the measurement of business…2… , a method of storage and …3…of information is required. In other words, there should be a filing system to sort out or…4…all the transactions of a business. Only in this way can…5…statements and other reports be prepared quickly and easily.

2. This filing system consists of…6….An account is the basic storage unit for data in accounting. In its simplest…7…an account has three parts: a…8…that describes the asset, liability, or owner's equity account, a left side, which is called the debit side, and a right side, which is called the…9…side. This form of the account, called a T account because of its…10…to the letter 'T', is used to analyse transactions.

Exercise 4.5

Read the whole text again and choose the best answer:

1. Why is the method of storage and retrieval of information required?

a) Because of the large amount of data gathered in the measurement of business transactions

b) Because there shouldn’t be a filing system to sort out or classify all the transactions of a business.

2. What does the filing system consist of?

а) The filing system consists of accounts.

b) The filing system consists of debit and credit.

3. Why is T account called so?

а) Because the word ‘Title’ begins from the letter ‘T’.

b) Because it is alike the letter 'T'.

4. Where is each account kept in a manual accounting system?

а) In a manual accounting system each account is kept placed together in a book or a file.

b) In a manual accounting system each account is kept on a separate page or card.

5. In which way must each company design its accounts?

a) Each company must design its accounts in a way that shows the nature of its business.

b) Each company must design its accounts in a way that is opposite to the nature of its business.