ТНЕ READING MODULE

Lesson 2

ТНЕ READING MODULE

Read the text: Financial accounting

Financial accounting differs from managerial accounting because the information and analyses аге for реорlе outside of the organization. This information goes to owners and _ prospective owners, creditors and lenders, етрlоуее unions customers, suppliers, governmental units, and the general рцоіі с. These external users аге interested іп the organization's profits, its ability to рау its bills, and other financial information. Much of the information is contained іп the annual report, а year! y statement of the financial condition and progress of the organization. Various quarterly reports keep the users тоте сштепт.

Bookkeeping involves the recording of business transactions. It is а rather mechanical process and does not demand the financial training and insights of accounting. Bookkeeping is ап important part of accounting, but accounting goes [ат beyond the mere recording of data. Accountants classify and summarize the data provided Ьу bookkeepers. They interpret the data and report them to management. They also suggest strategies for improving the financia! condition and progress of the firm. Accountants аге especially уа! иаыle for іпсоте tax preparation and financial analysis.

Accounting involves the gathering and recording of transactions (for ехатрlе, the sale of merchandise, the payment of а bill, or the receipt of merchandise into storage), and the periodic preparation of financial statements that summarize those transactions.

Auditing, the oldest агеа of ргастісе, remains the largest for тапу firms. Ап audit is а Сї'А'в (Certified Рцоііс Accountants) examination of а company's financial statements іп order to express ап оріпіоп about the fairness of those statements іп accordance with generally accepted ассоцптіпя principles. When а сотрапу wants to borrow funds Ігогп а bank or have its stock! isted оп а stock exchange, it пшзт present statements regarding its financial affairs. Весацзе these statements аге prepared Ьу independent ашіітогз, those interested іп the information know it has Ьееп presented fairly and ассшаtеlу.

І. Reading Exercises:

Exercise 1. Read and memorize Llsing а dictionary:

financial ассошпіпя, lenders, statement, bookkeeping, іпсоте tax preparation, receipt, storage, to borrow, stock exchange, statements, financial affairs

Exercise 2. Answer the оцезтіопз:

1) How does financia! ассоцшіла differ fюm managerial accounting?

2) What is bookkeeping?

3) What does bookkeeping involve?

What does ассошпіпя іпмоіуе?

4) What is an Audit?

Exercise 3. Match the left part with the right:

І1. Bookkeeping is

Іа) а CPA's examination of а company's І