Accounting Data Processing Methods

Date: 2015-10-07; view: 611.

Accounting performs measurement and communication functions to facilitate the operation of modem, business and our economic system. It collects and reports data to reveal economic activity, effect administrative control and improve business planning. It serves society, by providing useful information for a variety of objectives, and management, by de­veloping more efficient means' of operating a business. The main problems of recording economic activity are related to the business problems involved in asset acquisition, utilization, and disposition. The problems of communication, however, are tied to the need for accounting reports to transmit economic information for decision-making purposes. These two accounting functions are com­bined in the processing of economic data.

While there used to be a tendency to think of accounting as having only one method of processing data—the manually operated double-entry mechanism—accounting actually encompasses several. All ac­counting data processing methods, however, seem to be related to the concept of a transaction, even though it is variously defined. The dis­crete concept of a transaction provides a basis for measuring the flow of economic activity, which is a continuous process. Under the tradi­tional manual recording process, this transaction concept has permitted the past activities of an accounting entity to be recorded by a set of somewhat standardized accounting procedures.

Notes:

Answer the following questions:

1. What functions does accounting perform and for what purposes?

2. How does accounting serve society?

3. What are the main problems of recording economic activity related to?

4. What methods does accounting encompass?

5. What concept are accounting data processing methods related to?

6. What has the transaction concept permitted under the traditional recording process?

Text B

Foundations of accounting

Accounting contains elements both of science and art. The important thing is that it is not merely a collection of arithmetical techniques but a set of complex processes depending on and prepared for people. The human aspect, which many people, especially accountants, forget, arises because:

1. Most accounting reports of any significance depend, to a greater or lesser extent, on people's opinions and estimates.

2. Accounting reports are prepared in order to help people make decisions.

3. Accounting reports are based on activities which have been carried out by people.

But what specifically is accounting? It is very difficult to find a pithy definition that is all-inclusive but we can say that accounting is concerned with the provision of information in financial terms that will help in decisions concerning resource allocation, and the preparation of reports in financial terms describing the effects of past resource allocation decisions.

Examples of resource allocation decisions are:

Should an investor buy or sell shares?

Should a bank manager lend money to a firm?

How much tax should a company pay?

Which collective farm should get the extra tractor?

As you can see, accounting is needed in any society requiring resource allocation and its usefulness is not confined to 'capitalist' or 'mixed' economies.

An accountant is concerned with the provision and interpretation of financial information. He does not, as an accountant, make decisions. Many accountants do of course get directly involved in decision-making but when they do they are performing a different function.

Accounting is also concerned with reporting on the effects of past decisions. But one should consider whether this is done for its own sake or whether it is done in order to provide information which it is hoped will prove helpful in current and future decisions. We contend that knowledge of the past is relevant only if it can be used to help in making current and future decisions, for we can hope that we shall be able to influence the future by making appro­priate decisions but we cannot redo the past. Thus the measurement of past results is a subsidiary role, but because of the historical development of accounting and, perhaps, because of the limitations of the present state of the art, 'backward looking' accounting sometimes appears to be an end in itself and not as a means that will help in achieving a more fundamental objective.

'Foundation in Accounting', Lewis.R. and Gillespie.I. (Prentice Hall, 1986)

I. Vocabulary Notes:

III. Choose the proper words and answer the following questions:

1. What elements does accounting … ?

a) collects b) makes c) contains d) arises

2. Is accounting … a collection of arithmetical techniques or anything else?

a) hardly b) merely c) nearly d) scarcely

3. Why does the human aspect, which many people, especially …, forget, arise?

a) accountants b) engineers c) teachers d) workers

4. What is accounting … with?

a) comprehended b) decided c) contended d) concerned

5. Why is accounting needed in … allocation?

a) capitalist b) mixed c) resource d) usefulness

6. Do accountants get … involved in decision-making?

a) exactly b) actively c) relevantly d) directly

7. Accounting is concerned with reporting on the effects of past decisions. Is this done for its own sake or for … information which will prove helpful in current and future decisions?

a) providing b) interpreting c) giving d) using

8. Why is knowledge of the … relevant?

a) current b) present c) future d) past

9. Why is the measurement of past result a subsidiary … ?

a) objective b) end c) role d) aim

III. Translate the following words and word combinations:

наука та мистецтво; набір арифметичних методів; людський фактор (аспект); комплексні процеси; бухгалтерські звіти; оцінки людей; приймати рішення; основуватись на діяльності; стисле визначення; що включає в себе все; забезпечення інформації; фінансові терміни; розподіл ресурсів; інвестор; акції; директор банку; податок; вигода; змішана економіка; включатись; прийняття рішень; вплив минулих рішень; стверджувати; відповідні рішення; переробляти минуле; вимір; обмеженість; досягати; ціль.

IV. Fill in the blanks with proper prepositions or adverbs wherever necessary:

1. Accounting is a set … complex processes depending … and prepared … people.

2. Most accounting reports … any significance depend, … a great or lesser extent, … people's and estimates.

3. Accounting reports are based … activities which have been carried … by people.

4. Accounting is concerned … the provision … information … financial terms that will help … decisions concerning resource allocation.

5. Accounting is needed … any society requiring resource allocation and its usefulness is not confined … “capitalist” or “mixed” economies.

6. Accounting is also concerned … reporting … the effects of past decisions.

7. We can hope that we shall be able to influence … the future … making appropriate decisions but we cannot redo … the past.

8. Back-looking accounting sometimes appears to be an end … itself and not … a means that will help … achieving a more fundamental objective.

V. Think over and answer or choose the suitable point:

1. How many reasons does the author give to support the idea that accounting involves a human element?

2. Which of the following reasons does the author give as showing human influence on accounting?

a) Accounting summaries describe human action.

b) Accounting systems are artificial creation.

c) Accounting is affected negatively by human judgement.

d) Accounting is based on the subjective ideas of individuals.

3. In the definition of accounting given in the text (lines 13-15), which of the following are said to be its two main functions?

a) Providing general information to aid immediate decision-making.

b) Providing financial information to help with the future division of resources.

c) Providing financial information that will ensure the decisions made are correct.

d) Providing financial information to show the result of past use of resources.

4. The author gives examples of resource allocation decisions in lines 17-20. Indicate in the table below with a tick (Ö ) whether you think these decisions are important for a capitalist, a mixed or a state controlled economy. Some could be relevant to more than one type of economy:

5. According to the author is management decision-making part of an accountant's too? Which lines in the text give the answer?

VI. The statements below express the main ideas of the last paragraphs (lines 28-39). Number these statements so that they are in the same order as the ideas in the text. The first one is given for you:

VII. For each of the underlined words choose the meaning which best shows how it is used in the text:

1. Accounting is a set of complex processes depending on and prepared for people.

a) different b) confusing c) complicated d) unusual

2. It is difficult to find a pithy definition for accounting.

a) accurate b) short c) understandable d) comprehensive

3. The provision of information in financial terms will help in decisions concerning resource allocation.

a) providing b) researching c) producing d) organization

4. One should consider whether reporting is done for its own sake or for providing information in current and future decisions.

a) to provide work b) for one company only c) to solve problems d) for no other purpose

5. The measurement of past results is a subsidiary role.

a) less important b) different c) vital d) equally important

6. Because of the limitations of the present state of art, “backward-looking” accounting sometimes appears to be an end in itself.

a) technology b) government controls c) knowledge and techniques d) understanding

VIII. Express your point of view.

In the text (lines 21-23) it was said that accountancy is equally important for all types of economic systems. Do you agree with this? If true, does it mean that only one type of accounting system is correct or that the same system of accounting should be used in all economic systems and countries?

IX. Complete the following table with derivatives if any:

IX. Complete the following table with synonyms and antonyms, if any:

XI. Analyse the grammatical forms and constructions in italics:

1. The important thing is that accounting is not merely a collection of arithmetical techniques but a set of complex processes depending on and prepared for people.

2. Accounting reports are prepared in order to help people make decisions.

3. Accounting reports are based on activities which have been carried out by people.

4. Accounting is needed in any society requiring resource allocation and its usefulness is not confined to “capitalist” or “mixed” economies.

5. We contend that knowledge of the past is relevant only if it can be used to help in making current and future decisions, for we can hope that we shall be able to influence the future by making appropriate decisions but we cannot redo the past.

6. “Backward-looking” accounting sometimes appears to be an end in itself and not as a means that will help in achieving a more fundamental objective.

XII. English in the office.

It is important to remember that the English used in the office, particularly to visitors and strangers, is often more formal than that used in many situations. Look at the following dialogues and notes. The language used is typical of normal British office practice. If you use English at work, you may find some of the phrases worth learning.

(1) It is NOT normal in British English to use Sir or Madam.

(2) Use I'm afraid whenever you give somebody negative or unhelpful information.

(3) Notice the tag here. Tags are often used to make what we sound less aggressive. Without tags English, particularly used between strangers, often seems “cold” and even unfriendly.

(4) You are advised to avoid using please in the middle of sentences, as it can sound very abrupt particularly if your intonation is not perfect. Usually it belongs at the end of requests (Could you ask him to ring me, please) and the beginning of invitations (Please, come in.)

(5) Notice the standard way of asking someone to do something: Would you mind ___ing?

(6) Notice the five ways of asking for permission:

Would you mind if I left my coat please (Relatively formal)

Do you mind if I leave my coat please (Normal neutral English)

Could I leave my coat, please? (Normal neutral English)

May I leave my coat please? (Either formal or neutral – little used in modern English)

Can I leave my coat please? (Informal, not suited to business)

Remember how important is to add please at the end of all these requests.

XIII. Business idioms.

Although there are lots of “standard phrases” in business English which sometimes make it seem rather formal, one of the most important features of the spoken English used by English businessmen themselves, is that the opposite is true – the use of idioms is a sign of a relaxed atmosphere and that the discussions are friendly. The standard phrases (outside official meetings) often sound cold and unfriendly. Although a foreigner who uses idioms is taking a big risk, it can be useful to understand what your English colleague means.

A.	Memorize the following idioms and make a dialogue:
	He's got a lot on just now.	He is very busy.
	He's tied up at the moment.	He cannot speak to you.
	He's been there donkey's years.	He is and old employee.
	He's a bit of a lame duck.	He often needs help from others.
	He's not easy to get on with.	He argues a lot.
	He's got everything going for him.	He ought to succeed.
	He's on the ball.	He understands quickly.
	He's in a bit of a rut.	He needs a change.
	He doesn't miss a trick.	He always gets the best from a situation.
	He got carried away.	He exaggerated what he meant.
B.	The following idioms may be heared after a business meeting – perhaps at lunch or dinner. Memorize them and make a dialogue of your own.
	Shall we wet our whistles?	Do you want a drink?
	Can I top you up?	Do you want more to drink?
	On for the road?	Do you want another drink?
	Can I square up with you later?	I'll pay my share later.
	Can I just spend a penny?	I'm going to the toilet.
C.	Memorize the following idioms and make a dialogue of your own:
	He got on his high horse.	He was rather arrogant.
	He called a spade a spade.	He said exactly what he thought.
	He was given a red carpet treatment.	He was very well cared for.
	He was completely out of his depth.	He didn't understand at all.
	He was stopped in his tracks.	He met an unexpected problem.
	He put his head on the block.	He took the responsibility.
	He put his foot down.	He insisted.
	He held his own all right.	He wasn't overwhelmed by other people.
	He was the blue-eyed boy.	He was so popular he couldn't make a mistake.
	He was up the creek without a paddle.	He was in serious difficulties.
	He was up to his eyes.	He was very busy.
	He couldn't cope.	He wasn't able to do what he was supposed to.

Unit 2

The Purpose of Studying Accounting