4. Fill in the blanks.

1. Management accountants work with the …

2. Chief accounting officer is called a … or … … …

3. Industrial accountants work for …

4. … are in charge of the protection of the firm’s assets.

5. A … … … must pass a series of examinations.

6. … … assists business in preparing tax returns.

7. Management accounting services are … … of … …

5. Discuss the following questions with your partner.

1. What spheres is the field of accounting divided into?

2. What do managerial accountants deal with? What accountants work in this field on different levels of organizations?

3. What is public accounting concerned with? What spheres are included into public accounting?

4. What are the duties of internal auditors?

5. What is the most important function of a CPA?

6. What is the purpose of management advisory services?

7. What areas are included into governmental accounting?

Reading 2: The accounting equation

1. Study the topical vocabulary.

account payable	кредиторская задолженность, счет «Счет к оплате» или «Кредиторы», период погашения кредиторской задолженности
account receivable	дебиторская задолженность, счет «Счет к получению» или «Дебиторы»
accounting equation	бухгалтерское тождество, балансовое уравнение, балансовая увязка
assets	активы
buy on credit	покупать в кредит
capital (owners’ equity)	собственный капитал, собственный акционерный капитал
contributed capital	авансированный капитал, вложенный капитал
copyright	авторские права, гарантированный авторским правом
dividend	дивиденд, доля, квота, прибыль по акциям
earning	заработок, доход, прибыль
expenses	затраты, издержки, расходы
financial accounting	финансовое счетоводство
indebtedness	задолженность, сумма долга
inventories	товарно-материальные запасы
liabilities	пассивы, обязательства
loan	заем, ссуда, кредит
monetary items	денежные средства
net loss	балансовый убыток, чистые потери
net worth	чистая стоимость активов, чистый капитал, акционерная часть капитала компании
obligations	долговые обязательства, обязательства
patent	патент, право
retained earnings	доходы, удерживаемые на предприятии, нераспределенная прибыль
revenues	доходы, поступления
stockholders’ equity	акционерный капитал, чистый капитал
the bottom line	итоговая строка финансового отчета, чистая прибыль, итоговый результат
to benefit	приносить прибыль (пользу), получать выгоду
to exceed	превышать
to pay cash	платить наличными
to transfer assets	списывать с баланса, брать на баланс
trademark	товарный знак, торговая марка

B. Read the text.

The whole of financial accounting is based on the accounting equation. The resources possessed by the firm are known as Assets, and obviously, some of these resources will have been supplied by the owner of the business. The total amount supplied by him is known as Capital (Owners’ equity), if in fact he was the only one who had supplied the assets then the following equation would hold true:

Assets = Capital (Owners’ equity)

On the other hand, some of the assets will normally have been provided by someone other than* the owner. The indebtedness of the firm for these resources is known as Liabilities. The equation can now be expressed as:

Assets = Capital (Owners’ equity) + Liabilities

Assets are economic resources owned by a business that are expected to benefit future operations. Assets consist of property of all kinds, such as inventories (goods held for sale), land, buildings, machinery and motor vehicles (nonmonetary physical things), also benefits such as debts owing by customers and the amount of money in the bank account (monetary items called also account receivable). Other assets – the rights granted by patent, trademark, or copyright – are nonphysical.

Liabilities consist of money owing for goods supplied to the firm, and for expenses, also for loans made to the firm. So we can say that liabilities are present obligations of a business to pay cash, transfer assets, or provide services. Among these obligations are debts of the business, amounts owed to suppliers as we said above and services bought on credit (called account payable), borrowed money, salaries and wages owed to employees, taxes owed to the government.

Capital is often called the owner's equity or net worth. Owners’ equity represents the claims of a business to the assets of the business. Theoretically, it is what would be left over if all the liabilities were paid and sometimes is said to equal net assets. By rearranging the accounting equation, we can define owners’ equity this way:

Owners’ equity = assets – liabilities

The owners’ equity of a corporation is called stockholders’ equity, so the accounting equation becomes:

Assets = liabilities + stockholders’ equity

Stockholders’ equity has two parts: contributed capital and retained earnings:

Stockholders’ equity = contributed capital + retained earnings.

Contributed capital is the amount invested in the business by the stockholders. Retained earnings represent the equity of stockholders generated from the income –producing activity of the business and kept for use in the business.

Simply stated, revenues and expenses are increases and decreases in stockholders equity that result from operating a business. Generally speaking, a company is successful if its revenues exceed its expenses. When revenues exceed expenses, the difference is called net income; when expenses exceed revenues, the difference is called net loss.Net income – or net loss – is of course, “the bottom line”, and discloses whether or not a company has been profitable for a given period. Dividends are distributions to stockholders of assets (usually cash) generated by past earning. It is important not to confuse expenses and dividends, both of which reduce retained earnings.

Notes

a legal background - юридическое образование

extend far beyond - выходить далеко за рамки

entered into - в которых участвуют

adjust relationships with - строить отношения с…

as they fall due - когда придёт срок (погашения)

other than - помимо, кроме

put to use - использовать, употребить

C. Discuss the questions with your partner.

1. What are assets? Who supplies them? What assets are called nonphysical?

2. What do liabilities include?

3. What is capital?

4. What does owners’ equity represent?

5. What is the owners’ equity of a corporation? What parts does it consist of? What do these parts represent?

6. Under what circumstances is the company considered to be successful?

7. What are net income and net loss?

8. What shows the profitability of a company in the financial statement?

Reading 3: The Classified Balance Sheet

A. Study the topical vocabulary.

accounting period	отчетный период, финансовый год
classified balance sheet	классифицированный баланс
current assets	краткосрочные активы, оборотный фонд, ликвидные средства
current liabilities	текущая задолженность, краткосрочная
fixed assets	основные активы
franchise	исключительное право использования торговой марки, монопольное право
intangible assets	неосязаемые активы
liquidity	оборотные средства, ликвидность
long-term liabilities	долгосрочные обязательства (ответственность)
mortgages payable	ипотека, подлежащая погашению; закладные к оплате
non-current tangible assets	малоценные внеоборотные материальные активы
notes payable	дебиторская задолженность, векселя к платежу, счета к оплате
payable	cчета к оплате
property	собственность, имущество
receivable	дебиторская задолженность к получению, неоплаченный, счета дебиторов
salaries payable	задолженность по заработной плате
stock	облигация, ценные бумаги
tangible assets	материальные активы
taxes payable	задолженность по налогам; налог, подлежащий к уплате

B. Read the text.

Classifying assets. Assets may be grouped according to the degree of liquidity or the expected conversions to cash or the time it takes to use up the assets. For analytical purposes, assets are classified as follows:

Current assets are cash and other assets that can reasonably be expected to be converted to cash, used up, or sold within 1 year or less. Thus, on the classified balance sheet, current assets are listed first, based on their relative degrees of liquidity. Examples of current assets include supplies, insurance, and accounts receivable.

Investments may be either short- or long-term assets depending on the nature of the investments. Generally, bonds are considered long-term investments, whereas stocks may be either long-or short-term investments. Investments generally appear immediately following current assets on the classified balance sheet.

Property, plant and equipment are tangible, long-term assets; they are used in the continuing operations of the business and are expected to have useful lives of more than 1 year. They are also known as plant assets or fixed assets.

Intangible assets are usually long-term in nature and are traditionally shown on the classified balance sheet after plant assets. They lack physical substance and in some cases represent a right granted by a government (patent) or another company (franchise).

Classifying liabilities. Liabilities are classified in a similar manner. Liabilities are considered to be current liabilities if the obligation is to be settled within 1 year or within the current accounting period. These debts are usually settled with the payment of current assets. Examples of current liabilities are accounts payable, taxes payable, salaries payable, and notes payable.

Following current liabilities on the balance sheet are long-term liabilities, which are usually payable in more than a year. Examples of long-term liabilities include bonds payable and mortgages payable. In the year in which a long-term liabilities becomes payable, it is usually converted to a current liability.

C. According to this exhibit explain the classification of assets and liabilities.

The current and long term classification of assets and liabilities

D. Discuss the following with your partner.

1. What principle is the classification of assets based on?

2. What are current assets?

3. What types of investments can be distinguished?

4. What is the difference between tangible and intangible assets?

5. What does the term “current liabilities” refer to?

6. What is included into the category of long-term liabilities?

E. Study the classified balance sheet carefully and answer the following questions.

1. What are total assets?

2. What are total liabilities?

3. What is stockholders’ equity?