Exercise 1.Match each sentence or word in the left-hand column with the best meaning in the right-hand column.
| 1. creditor 2. loss 3. purchases 4. stock 5. withdrawal 6. debtors 7. discount 8. balance 9. carriage 10.drawings 11.goodwill 12.acquisition | a) this is the name of the difference between the credit and debit side of an account; b) companies make this when they sell their goods for less than it costs them to make them; c) cash or goods which the owner takes from the company for his own private use; d) the official books for keeping accounts; e) this company has supplied goods but has not received any money for them; f) the extra amount which is paid for a company above the value of its assets; g) an amount of money which is taken out of an account; h) a reduction in the price which is offered to customers; i) the purchase of another company; j) goods which the company has available to sell; k) customers who have received goods but not paid for them yet; l) goods which are bought by the company. |
Exercise 2.Complete the following words (see example):
1. This is the name for building, machinery, money in the bank and money owed by customers. ASSETS
2. The loss of value of the things in number D_ P_ _ _ _ _ _ _ _ N
3. Money which is borrowed L_ _ _
4. The extra money a company or person pays for borrowing money I_ _ _ _ _ST
5. The total sum of money which is supplied by the owners of a company to set up
C_ _ _ T_ _
6. These are bought by people wishing to invest in the company S_ _ _ _ S
7. An official examination of the accounts A_ _ _ T
8. A financial plan for the future B_ _ _ _ _T
9. A statement of the financial position of the company
B_ _ _ _ _ E SHEET
10. Companies make this when they sell their goods for more than it costs them to make them P_ _ _ _ T
11. This is drawn up to check that the two sides of the accounts are the same
T_ _ _ L B_ _ _ _ _ _
12. The official books for keeping accounts L_D_ _ _ S
Exercise 3.Match the remarks on the left with the responses on the right.
| 1. You’re an accountant? Does that mean you spend your time writing down credits and debits, and adding up columns of figures all day? Can’t be very exciting. 2. So what do accountants do? 3. You mean the shareholders? 4. So you prepare reports for managers? 5. And the cost of the accounts department! 6. You mean what they do in the front of shops? 7. Ah, now that’s interesting… 8. Not at all. As a matter of fact, I’m a tax inspector…. | a. Ha! Now you’re going to ask me to tell you how you can pay less tax. b. No, managerial accountants do, but I work in cost accounting. We have to work out the real cost of each item the company makes, which means finding a way to allocate all the overheads to different products. c. No, not only. Managers always need the help of accountants. They need financial statements, and budgets, and cash-flow projections, and so on, to measure the success of what they’ve done, and to make decisions about allocating resources for future projects. d. Of course. But like I said, we’re necessary. And useful. Haven’t you heard of “window dressing?” e) Sure, but it’s also another name for what some people call “creative accounting” – making a company’s financial situation look as good as possible in the balance sheet, and so on. It’s not very legal, but happens. The accountants in my firm also have lots of wonderful ways of reducing our tax bill. f) That’s bookkeeping. Not quite the same thing. g) Well, accountants do record cash flows, and the value of assets and liabilities, and they calculate profits and losses, and so on. But it’s not just writing down numbers. We’re really in the business of supply people with information. |
Exercise 4.Match up these accounting principles with the definitions below:
1. The separate entity or accounting entity assumption
2. The continuity or going-concern assumption
3. The unit-of-measure assumption
4. The time-period or accounting period assumption
5. The historical cost principle
6. The revenue or realization principle
7. The matching principle
8. The objective principle
9. The consistency principle
10. The full-disclosure principle
11. The principle of conservatism
a) All transactions and other items to be accounted for must be in a single, supposedly stable monetary unit.
b) An enterprise is an accounting unit separate from its owners, creditors, etc.
c) Financial data must be reported for particular (short) periods, which makes accrual and deferral necessary.
d) Revenue is realized at the moment when goods are sold (or change hands) or when services are rendered.
e) The business will continue indefinitely into the future.
f) The initial price paid for the acquisition of assets is the one that is recorded in accounts.
g) This is the contrary of recording “below-the-line” items.
h) This is one of the justifications for historical cost accounting, which requires no subjective assessments of replacement values.
i) This leads to the accrual (accumulation) and deferral (postponement) of costs.
j) This means that insignificant trivial expenses, like each pencil or typewriter ribbon, need not be accounted for separately, but are exempted by principle of materiality.
k) This prevents companies selecting methods according to the inflation rate, etc.
Exercise 5.Complete the text using these words:
| credits journals transactions | debits ledger transferred | double-entry posted trial balance | invoice receipt vouchers |
Bookkeepers record every purchase and sale that a business makes, in the order that they take place, in (1) … . At a later date, these temporary records are entered in or (2) … to the relevant account book or (3) … . Of course the “books” these days are likely to be computer files. At the end of an accounting period, all the relevant totals are (4) … to the profit and loss account. (5) … bookkeeping records the dual effect of every transaction – a value both received and parted with. Payments made of (6) … are entered on the left-hand (debtor) side of an account, and payments received or (7) … on the right-hand side. Bookkeepers will periodically do a (8) … to rest whether both sides of an account book match. In most business (9) …, the seller of goods or services sends the buyer a bill or (10) …, and later a (11) … acknowledging payment. Businesses are obliged to retain the documents – known as (12) … – that support or prove an item in an account, and make them available to the internal and external auditors who check the accounts. Bookkeepers are not to be confused with librarians, who also keep books, or with bookmakers, who “make books” in the sense that they accept bets (on horse races, etc.) and traditionally wrote them down in a book like a bookkeeper’s journal. Accountants, unlike bookkeepers, analyze financial records, and decide how to present them.
Exercise 6.Choose the best alternative to complete the sentence.
1. It’s up to the accountant to _______ the various financial statements.
a) interpret; b) intercept; c) invent; d) translate.
2. The bookkeeper keeps a record of every financial _______.
a) action; b) transaction; c) entry; d) transcription.
3. It’s essential to _______ the invoice number in any correspondence.
a) estimate; b) quote; c) say; d) tell.
4. The _______ of the invoice goes to the customer, another copy goes to
Sales, and we keep the other one here in Accounts.
a) photocopy; b) issue; c) top copy; d) account.
5. We’re in _______ with our supplier over this invoice so don’t pay it
until you hear from me.
a) argument; b) dispute; c) agreement; d) distress.
6. We send a _______ to customers who haven’t settled their accounts.
a) reminder; b) remainder; c) remembrance; d) memory.
7. If these figures could be _______ into parts and labor it would make
them easier to understand.
a) set up; b) broken down; c) rounded up; d) laid down.
8. This company has a weekly _______ of about W100,000.
a) pay; b) payroll; c) salary; d) wage.
9. Buying that new machinery has seriously _______ our reserves.
a) depreciated; b) depleted; c) depressed; d) deprived.
10. By examining the balance _______ and other documents we were able
to find out that the company was not doing as well as they claimed.
a) slip; b) ledger; c) account; d) sheet.
11. Surely we can set some of these expenses _______ tax.
a) against; b) for; c) on; d) from.
12. The rent for the office is already 3 months _______!
a) overtime; b) in the red; c) in demand; d) overdue.
13. Due to the economic climate we have had to _______ more bad debts
this year than ever before.
a) tell off; b) write off; c) find out; d) note down.
14. Do they have enough working _______ to keep trading?
a) capital; b) expenses; c) accounts; d) currency.
15. Such items as buildings and machinery are known as _______ assets.
a) current; b) hidden; c) fixed; d) liquid.
Exercise 7.Get ready for the discussion:
1. What particular skills do you think different kinds of accountants need?
2. Do you think you posses these skills? What are your assets and liabilities?
3. If you have yet to choose a career, do you think it could be accountancy?
4. Comment the following quotations:
a) Poverty is the parent of revolution and crime (Aristotle, 384 – 322 B.C.)
b) A fool and his money are soon parted (G. Buchanan, 1506 - 1582)