Text 5. Basic concepts of accounting

The basic concepts of accounting as we understand them today were first published in Italy in 1494 by Luca Pacioli¹ (1445 - 1517). He described them in a section of his book on applied mathematics. Pacioli was a Franciscan monk whose life and work was dedicated to the glory of God.

Accounting is the process of measuring and recording the financial value of the assets and liabilities of a business and monitoring these values as they change with the passage of time. Accounting records are kept for individual persons² or legal entities³ - a company or a non-profit organization (for example, a church, a club, etc.).

The assets⁴ of a business are those things that belong to the business and can be sold in exchange for money. Assets may include land, buildings, vehicles, stock, equipment, precious metals, bank accounts with positive balances and money owed to the business by its debtors. Accounting was always an attempt to record a relevant capital assets⁵ or production capacity.

The liabilities⁶ of a business are things that will require payment of money in the future: unpaid bills, unpaid taxes, unpaid wages, overdrawn bank accounts and money due to creditors.

The equity⁷ is defined as the own capital of a business: the assets minus the liabilities. The equity is the amount of money that would be released if the business was wound up.

Assets, liabilities and equity are financial indicators to describe financial condition of a company. They are included in the balance sheet⁸. The balance sheet is a financial statement of the assets, liabilities and equity of a business as they exist at a particular point in time.

The income⁹ of a business is the sum of those things that increase the value of the assets. Examples include revenue from the sale of goods, supplied equipment or rendered services, rent or investment by the owners.

The expenses¹⁰ of a business are those things that reduce the value of the assets: cost of raw materials, paid rent or interest, electricity and telephone bills, wages, taxes, dividends, depreciation and donations to charity. The financial statement that is used to present this information is known as the Profit and Loss Statement (or income statement)¹¹.

______________________________________________________________________________

VOCABULARY

Luca Pacioli - Лука Пачоли, итальянский математик, в 1494 г. опубликовал трактат "Сумма арифметики, геометрии, учения о пропорциях и отношениях", считающийся первой книгой, в которой была описана система двойной бухгалтерии;

an individual person – физическое лицо

a legal entity – юридическое лицо

capital assets -основные средства [фонды], материальные внеоборотные [долгосрочные] активы);

expenses – расходы;

Profit and Loss Statement, income statement – отчет о прибылях и убытках.

Задание 11. Ответьте письменно на вопросы по тексту 5.

1. Who invented the basic concepts of modern accounting?

2. Whom are accounting records kept for?

3. What does the assets mean?

4. What are the liabilities of a business?

5. What is the equity?

6. What is a balance sheet?

7. What is the income of a business?

8. What are the expenses of a business?

9. What is the income statement?

Задание 12. Выучите новую лексику из текстов 4 и 5

РАЗДЕЛ 2. Accountant’s resume. Business visits

Задание 1. Ниже представлены названия и определения профессий специалистов-бухгалтеров. Заполните пропуски словами из рамки ниже и диаграмму ниже.

specializing • studying • for inspecting its accounts • processing the records • giving administrative support • to inspect its accounts• supervises work• acts as

Trainee accountant (бухгалтер-стажер)

Accountants who are_____________________¹ for professional examinations

Book-keeper (accountant) (бухгалтер)

Mid-level administrative staff responsible for_____________________² of a business's financial activities.

Chief Accountant (главный бухгалтер)

Chief Accountant _____________³of the Accounting Department, checks and approves financial documents, balance sheets and Profit and Loss Statements.

Deputy Chief Accountant (заместитель главного бухгалтера)

Deputy Chief Accountant _____________________⁴ the Chief Accountant in his/her absence.

Tax accountant (бухгалтер по налогообложению)

A tax accountant_____________________ ⁵ in a company's tax affairs.

Back-office manager (менеджер операционного отдела)

Person in charge of the staff responsible for_____________________⁶ to the Finance department.

Internal auditors/ controllers (внутренние аудиторы/ревизоры)

Employees of a company who are responsible_____________________⁷.

External auditors/ controllers (внешние аудиторы/ревизоры)

People employed by an outside firm of accountants and hired by a company.