Accounting provides a
financial picture a business firm. An accounting department records measures
the activity of a business and reports on the effects of these transactions on
the firm’s financial condition. Accounting records and reports provided data
that are used by management, stockholders, creditors, independent analysts,
banks and goverment.
The income statement and
balance sheet are the two types of records that most business prepare
regularly. By reading these statement, once can identify how money was received
and spent by a company. By analyzing these records, once can determine whether
or not the activities of the company have been good for it.
One major tool for the
analysis of accounting records is rations analysis. A ration analysis is the
relationships of two figures. There three main categories of rations in
finance. One such ratio deals with profitability. The main example of this is
the Returns Of Investment Rations, which is the most widely used single measure
of a firm’s operating efficiency.
A second set of rations
helps a company evaluate its current financial position. These ratios deal with
assets and liabilities. A third set of ratios deans with the overall financial
structure of the company, primarily analyzing the value of the ownership of the
firm.
A. Answer
the following questions
1. In general terms, what
is the purpose of accounting ?
( In general terms,
accounting provides a financial picture a business firm)
2. Who uses the data
which is provided by accounting records?
(Accounting records and
reports provided data that are used by management, stockholders, creditors,
independent analysts, banks and goverment.)
3. What are the two types
of records that are prepared by most business ?
(The income statement and
balance sheet are the two types of records that most business prepare
regularly.)
4. What can one learn by
analyzing the income statement and balance sheet of a company?
(By reading these statement,
once can identify how money was received and spent by a company. By analyzing
these records, once can determine whether or not the activities of the company
have been good for it.)
5. What is ratio analysis
used for ?
( Rasio analysis is one
of the main tools used to analyze accounting records )
B. Choose
the correct word available to complete the following sentences
Record ( N)
Record ( V)
Report ( N)
Report (V)
Provit (N)
Provit (V)
1. Accounting
is needed to ( ) all business transactions
2. He
keeps very neat()
3. Our
firm’s current (provit) are very high
4. They ()
from their associations with that
company
5. Our ()
of accounts receivable show that $5.000 is owed of us
6. The
activity is () on income statements and balance sheets
7.
Secretary had finished typing the () before the manager arrived at the
office
8. How
much does the company make () this years ?
Accounting
( David and Mary both work in a large company. They
are now having lunch in the company cafetaria)
David : i’m glad you could meet me for lunch. You
looked so busy this morning. Surrounded
by so many statements and your calculator, of course.
Mary : of
course ! My calculator is my right hand!
David : I
never noticed
Mary :
Seriously, David you now, the accounting
department is very busy
David : I know. We’re all busy, totaling accounts. But
I’ve already turned in the report on my department
Mary : Then I
guess my department should receive your statement soon.
David : You already have it
Mary : Good
David : So, how is business?
Mary : How
would I know ? I only work on some records and statements. I don’t have the
whole picture. I’m not the auditor. But I guess the company’s doing well.
David : I certainly hope so. We have to keep the
investors happy, creditors, laborunion, and really, every one.
Mary : well,
the balance sheet and profit and loss statement for this fiscal year should be
ready soon. So any one can check out the company in the financial statement.
David :
Speaking of finances, are you the one who works on the paychecks?
Mary : Why
do you ask about it?
David : I
thought you might explain to me the difference between my gross pay and my net
take – home pay?
Mary : the
explaination takes one word, taxes actually, the salaries are done through the
computer
David :
Really?
Mary : Sure.
How could we handle any volume in a
large company, billings, sales, salaries, without computer
David :
You’re right. Mary, you can credit my account any day
Mary :David
don’t be silly. Let’s get some dessert
C.
Complete the following words
1. This is the name for buildings machinery,
money in the bank and money owned by customers. (Assets)
2. The loss of value of the things in number one
(1). ( depreciation)
3. Money which is borrowed (loan)
4. The extra money a company or person pays for
borrowing money ( interest )
5. The total sum of money which is supplied by
the owners of a company to set it up ( capital )
6. Cash or goods which the owner takes from the
company for his own private use (
7. These are bought by people wishing to invest
in the company (shares)
8. The extra amount which is paid for a company
above the value of its assets ( goodwill )
9. The purchase of
another company ( acqusition )
10. An official
examination of the accounts ( audit )
11. A financial plan for
the future ()
12. A statement of the
financial position the company (balance sheet)
13. The official books for keeping accounts (
14. A reduction in the
price which is offered to customers (discount)
15. This company has supplied goods but has not
received any money for them yet (creditor)
16. Goods which has the company has available to
sell ( stock )
17. Customers who have received goods but not paid
for them yet (debtors)
18. This is the name of
the difference between the credit and
debit side of the account ( balance )
19. Companies make this
when they sell their goods for more than it costs ( profit )
20. Companies make this
when they sell their goods for less than it costs ( loss )
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