New words:

1. Revenue – выручка, валовой доход

2. To charge – требовать оплату, взыскивать, назначать, требовать цену

3. A date – дата, число, срок

4. Payment – платеж, оплата, погашение (долга)

5. Expenses – расходы, издержки, затраты

6. Rent – рента, арендная плата

7. Salary – оклад, жалование

8. To consume – потреблять, расходовать

9. To incur – потерпеть (напр. убытки), принять на себя (напр. расходы)

10. To reduce – сокращать, уменьшать, снижать

11. Net income – чистый доход, чистая прибыль

12. Net profit – чистая прибыль

13. Net loss – чистый убыток

14. Supplies – сырье, материалы

15. Accounting period – отчетный период, период бухгалтерской отчетности

16. Fiscal year – фискальный, финансовый, бюджетный год

17. To coincide – совпадать

18. Withdrawal – отзыв, изъятие, отмена, аннулирование, снятие (со счета)

19. Drawing – выписка тратты (чека), снятие ( денег со счета)

20. Earning – доход, прибыль, заработная плата

21. To offset – возмещать, компенсировать

22. Temporary – временный

23. To expand – расширять

24. Excess – избыток, излишек, превышение

Besides three key accounting elements of every business entity there exist three additional elements: revenue, expenses, withdrawals.

Revenue are the amount the business charges customers for products sold or services performed. Customers may pay with cash or the business owner may allow the customer to pay at a later date (credit). Most business recognize revenue when earned, even if payment has not been received. Revenue increases both assets and owner equity.

Expenses represent the decrease in assets (or increase in liabilities) resulting from efforts to produce revenue. Common examples of expenses are rent, salaries, supplies consumed, and many taxes. As expenses are incurred, either assets are consumed (supplies), cash is paid (salaries), or a promise is made to pay cash at a future date. The promise to pay in the future represents a liability. Most business recognise expenses when incurred, even if cash has not yet been paid. Expenses either decrease assets or increase liabilities; expenses always reduce owner’s equity. If revenues exceed expenses of the period, the excess is net income or net profit for the period. If expenses exceed revenues of the period, the excess is net loss for the period.

The owner can determine the time interval used to measure net income or loss. It may be a month, a quarter (three months), a year, or some other period of time. That concept that income determination can be made on a periodic basis is known as the accounting period concept. Any accounting period of twelve months is called a fiscal year. The fiscal year often coincides with the calendar year.

Withdrawals or drawings, reduce owner’s equity as a result of the owner taking cash or other assets out of the business for personal use. Since earnings are expected to offset withdrawals, this reduction is viewed as temporary.

Tasks.

1. Define each of the additional accounting elements.

2. Match the following additional elements with their definitions:

Revenues  represents the decrease in assets

Expenses  reduce owner’s equity

Withdrawals the amount for products sold or services perfomed

3. Find in the text the English equivalents for the following words and word combinations:

        рента, затраты, расчетный период, временный, возмещать

Text 4.The double entry framework. The T account. Debit and Credit.

New words:

1. Entry – запись, проводка.

2. Double entry – двойная запись.

3. Framework – рамки.

4. To debit – дебетовать, относить на дебит счета; сущ. расход.

5. To credit – кредитовать; сущ. приход.

6. Investment – помещение капитала.

7. Accounts receivable – счет дебиторов (в балансе), дебиторы по расчетам, дебиторская задолженность.

8. Accounts payable – счет кредиторов (в балансе), кредиторы по расчетам, кредиторская задолженность.

9. Footing – итог, сумма столбца цифр

The T account.

The assets of a business may consist of many items, such as cash, accounts receivable, merchandise, equipment, buildings and land. The liabilities may consist of one or more items, such as accounts payable and notes payable. Similary, owner’s equity may consist of the owner’s investment and various revenue and expense items.

A separate account is used to record the increases and decreases in each type of assets, liability, owner’s equity, revenue and expense.

The T account gets its name from the fact that it resembles the letter T. The T account has three major parts:

1. The Title.

2. The debit or left side.

3. The credit or right side/

The debit side is always on the left and the credit side is always on the right. This is true for all types of asset, Liability, owner’s equity, revenue and expense accounts.

Balancing a T account.

To determine the balance of a T account at any time, simply total the dollar (ruble) amounts on the debit and credit sides. These totals are known as footings. The difference between the footings is called the balance of the account. The amount is then written on the side with the larger footing.

To debit an account means to enter an amount on the left or debit side of the account. To credit an account means to enter an amount on the right or credit side of the account. Debits increase assets and decrease liabilities and owner’s equity. Credits decrease assets and increase liabilities and owner’s equity.

Tasks

1. Complete the sentences:

To debit an account

To credit an account

To determine the balance of a T account

A separate account is used to

The T account gets its name

2. Answer the following questions:

a. What is a separate account used to?

b. What major parts has the T account?

c. Debit side is always on the left and credit side is always on the right. For what types of accounts is it true?

d. What do you know about footings?

3. Tell in your own words the defenition of the: debit, credit, the T account, footings, balance.