Unit 4 Accounting v2 - Material aus Vorlesung (Unit 4) PDF

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Material aus Vorlesung (Unit 4)...

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Unit 4 | Accounting (GB)

Business English 1

Unit 4 Accounting Learning outcomes 1. Be able to use numbers accurately 2. Understand and apply key vocabulary relating to Accounting 3. Understand and discuss financial statements 4. Recognise errors on financial statements 5. Be aware of recent changes in the accounting industry and impact of these on businesses 6. Be able to read and understand law excerpts specific to accounting 7. Be able to analyse a case study using a range of resources

Discussion – Which payment method? Discuss the following comments and decide which payment method matches each statement:

cash

credit card

overdraft

debit card

bank transfer direct debit

loan

grant mortgage

1. ‘I always pay with this card if possible because the money I pay isn’t taken from my bank account until the end of the month.’ 2. ‘Our electricity bill is paid automatically. The company takes the amount from our bank account each month. We signed an agreement with the electricity company and the bank which lets them do this.’ 3. ‘A government scheme provided me with a significant amount of money to start up my business. Thankfully, I don’t have to pay it back.’ 4. ‘I paid their last bill by typing in the name of the company and entering the amount using internet banking. My bank took the money from my account and put it into their account.’ 5. ‘I don’t like using plastic so that leaves me only one option.’ 6. ‘After analysing my income and expenditure, the bank has agreed to lend me a large amount of money to buy a house.’ 7. ‘I only borrow money when necessary and I always shop around for the best interest rates.’ 8. ‘Where I live, paying with this card is easy and cheap. You just insert your card in the machine, enter your PIN and the payment is made from your bank account more or less immediately.’ 9. ‘Occasionally, towards the end of the month, I spend more money than I have in my bank account. If I don’t add funds to my account quickly, I usually have to pay a fee.’ Materials by L Commandeur

1

University of Bayreuth

Unit 4 | Accounting (GB)

Business English 1

Discuss:  Which of the above payment methods do you use?  Which do you avoid using?  What is the difference between a Debit Card and a Credit Card?  What are some of the benefits or problems with buying something on credit?

Practice: Using Numbers It is important to be able to read, write and understand numbers clearly in English. Something that isn’t as straightforward as it might sound!

Dealing with financial figures:   



Currency always appear at the front of the number e.g. $350 Decimal points are used to separate values not commas e.g. $350.75 Commas are used to separate hundreds from thousands, thousands from millions and millions from billions e.g. $1,535,350.75 – four digit year such as 1984 do not follow this rule. Sometimes abbreviations are used for larger numbers: bn is billion, m is million and k is thousand e.g. $3m is the same as $3,000,000

Working in pairs take turns to practice reading out and writing numbers. Student A should read out the corresponding list below and student B should write down the answer in number form (not words) without looking at the list. Once complete, switch roles and Student B reads the corresponding list below for Student A to attempt. Student A

Student B

$456,945,654

1876

65.28%

¥781,854

49.25m

87.43%

3,000 – 1,400 = ?

3k

1995

€618

54m

€65.8bn

€295

0.384

0.675

35.75m

7k

4,000 – 1,800 = ?

¥560,786

$954,342,438

£3.15

98m

€27.8bn

£9.20

Materials by L Commandeur

1

University of Bayreuth

Unit 4 | Accounting (GB)

Business English 1

Vocabulary Match the expressions on the left with their definitions on the right.

1. Chief Financial Officer/CFO

a. A summary of the amounts of a firm’s assets, liabilities and owners’ equity accounts at the end of a specific accounting period

2. balance sheet

b. A term for an accountant who has met the requirements of an American institute c.

3. lender

A person employed to make a close examination of a company’s financial statements and accounting practices

4. Certified Public Accountant/CPA

d. deliberate deceit in order to obtain money or other benefits

5. audit

e. A summary of a firm’s revenues and expenses during a specified accounting period

6. fraud

f.

7. income statement

g. the corporate executive responsible for financial planning and record keeping

someone who provides a company with stock

h. acting according to certain accepted standards 8. auditor

i.

A close examination of a company’s financial statements and accounting practices

j.

someone who provides financial resource temporarily on the condition that the amount borrowed is returned, usually with an interest fee

9. compliance 10. supplier

Discussion Who uses financial statements? Discuss the following questions and write down your answers. 1. Why do companies draw up financial statements? 2. Which groups of people inside and outside the company are the financial statements for?

Materials by L Commandeur

1

University of Bayreuth

Unit 4 | Accounting (GB)

Business English 1

Reading The text below is an excerpt from an interview with Andriy Tatarchuk, Financial and Sales Manager at Enmark Leasing, Kiev, Ukraine. Read the text and note down: 1. How he answers the two questions above. 2. Why are these groups of people interested in the financial statements of the company? In addition, fill the gaps with the correct grammatical form using the words in brackets. Interviewer: Why do companies need these statements? Andriy Tatarchuk: Company statements are prepared annually or twice a year. They are there __________ (reflect) the work of the company within specific periods of time. The company prepares these statements for internal use by the company itself and also for external users. The top management and the shareholders of the company use the statements __________ (evaluate) its performance over a certain period of time. Management can see how the company __________ (perform) in the current period and in the previous periods and see if it __________ (find) ways to improve or increase its performance, or sometimes solve certain company problems – if they are visible through the financial statements. Shareholders at the same time can spot positive or negative trends in the company. They make a different sort of analysis – they look at the statements in a different way to the management, in order to make future investment decisions: whether to buy more shares in the company or whether they have to sell shares. External users of the company financial statements are possible future investors, as well as tax authorities and other government regulatory bodies that check the finances depending on the sphere of activity in which the company __________ (operate).

Materials by L Commandeur

1

University of Bayreuth

Unit 4 | Accounting (GB)

Business English 1

Discussing the Balance Sheet Agnes Adamuska has been in business as a beauty therapist for a year and has drawn up her balance sheet herself. Here is her first attempt. As you can see, she has put some assets and liabilities in the wrong place. Can you see any other errors?

Property Stock of materials Original cost of equipment (estimated to last 4 years)

$000 50 4 8 --------------62

Accounts payable Cash Retained Earnings

Less Accounts receivable Total assets

Notes payable Common Stock Bank loan (long-term)

5 2 6 --------------13

5 --------------8 --------------12 30 14 --------------56

TASK Work in pairs to draw up the balance sheet correctly - make sure it balances!

Materials by L Commandeur

1

University of Bayreuth

Unit 4 | Accounting (GB)

Business English 1

Reading: Legal Documents 1. Below you will find an excerpt from the Sarbanes Oxley Act. Circle the subject of the sentence. Then underline the verb(s) The Whistleblower clause Whoever knowingly, with the intent to retaliate, takes any action harmful to any person, including interference with the lawful employment or livelihood of any person, for providing to a law enforcement office any truthful information relating to the commission or possible commission of any federal offence, shall be fined under this title, imprisoned not more than 10 years, or both. Section 1107 of the SOX 18 U.S.C §1513(e) 2. Highlight the words in the passage meaning  The means of earning the money you need to exist  The act of perpetrating a crime  An illegal act  The division of a legal text or statute  A person working for the government whose job it is to ensure that laws are observed

3. What is the worst thing that can happen to an employer who takes revenge on an employee for whistle-blowing? ___________________________________________________________________________________ ___________________________________________________________________________________ 4. Read this second excerpt from the Sarbanes-Oxley Act and circle the subject of the sentence. Criminal penalties for altering documents Whoever knowingly alters, destroys, mutilates, conceals, covers up, falsifies, or makes a false entry in any record, document, or tangible object with the intent to impede, obstruct or influence the investigation or proper administration of any matter within the jurisdiction of any department or agency of the United States or any case filed under title 11, or in relation to or contemplation of any such matter or case, shall be fined under this title, imprisoned not more than 20 years, or both. Section 802(a) of the SOX, 18 U.S.C §1519 5. Highlight the words in the passage meaning  The act of carrying out a function  To change in a fraudulent way  To remove or damage a part of something  Authority or control  Material, capable of being touched

6. How does the punishment for dishonest accountants or auditors compare with the punishment for retaliating against whistleblowers? ______________________________________________________________________________________ ______________________________________________________________________________________ Source: Career Express Business English 2

Materials by L Commandeur

1

University of Bayreuth

Unit 4 | Accounting (GB)

Business English 1

Discussion: Does the punishment fit the crime? Look again at the two law excerpts above, discuss the following:   

Are these laws fair? Or is the punishment too harsh/lenient? What do you think an appropriate punishment would be? Uli Hoeneß was jailed for 3.5 years for evading €28.5m in taxes, was this fair?

Homework Research the Sarbanes Oxley act of 2002. What is it and what are some of the components of the act? Complete the table below and bring to next weeks lesson.

The Sarbanes Oxley act of 2002 1. Sources

2. Overall Purpose

3. Issues the act sought to address

4. Changes the act introduced to tackle these issues

5. Drawbacks

6. Advantages

7. Conclusion – Your opinion

Materials by L Commandeur

1

University of Bayreuth

Unit 4 | Accounting (GB)

Business English 1

Accounting II

Discussion In groups of 4-5, discuss the following questions. Be prepared to share with the class: 1. What is the Sarbanes-Oxley Act? 2. What is the cause of its existence? 3. What are some of the components of the act?

Vocabulary Use the empty column to write in the verbs from the column on the left so that they match up with the words on the right. To incur To realise To record To make misleading To be To carry out an To cook the To drive up To come under To comply with

Materials by L Commandeur

Books Losses Liable Demand Expenses Pressure Disclosures Investigation Standards Gains

1

University of Bayreuth

Unit 4 | Accounting (GB)

Business English 1

Listening Jim Turner learning about balance sheets Jim Turner has just taken over his uncle’s plumbing supplies company. As he is completely new to the business, he has asked the company’s controller, Vijay Sengupta, to give him a rundown of the company’s financial condition. Listen to their conversation and enter the missing figures into the balance sheet.

Wiggin’s Widgets, Inc. balance sheet ending last quarter ASSETS

$000

Current Assets Cash and cash equivalents

$15,000

Accounts receivable

52,500

Inventory Total Current Assets

37,500

Plant and machinery

$30,000

1.

Less depreciation Land

2. 12,000

Intangible assets TOTAL ASSETS

3,000 3.

LIABILITIES AND SHAREHOLDERS’ EQUITY LIABILITIES Accounts payable

$30,000

Taxes payable

4.

Long-term bonds issued TOTAL LIABILITIES

22,500 5.

Common stock Retained earnings

6. 7.

TOTAL SHAREHOLDERS’ EQUITY

8. $132,000

LIABILITIES AND SHAREHOLDERS’ EQUITY

Source: Career Express Business English 2

Materials by L Commandeur

1

University of Bayreuth

Unit 4 | Accounting (GB)

Business English 1

Case Study: Enron Scan the article below and find the relevant information to answer the following questions. 1. 2. 3. 4. 5. 6. 7. 8. 9.

What type of business(es) was Enron involved in? How many people did the company employ? What was Enron’s net value in the year before the company collapsed? What was the name of the Chief Executive Officer? Who was responsible for cooking the books? What was the trick used to cook the books? What was the name of the firm responsible for checking the books? Who is the hero in the story? What is the US government organisation responsible for protecting investors against fraudulent and manipulative practices in the securities market called? 10. What are the (legal) reasons why Enron executives were sent to jail?

Source: Career Express Business English 2

Materials by L Commandeur

1

University of Bayreuth

Unit 4 | Accounting (GB)

Business English 1

Discuss 1. Why was the collapse of Enron a disaster for many of its employees? 2. Why did the Securities and Exchange Commission not intervene earlier in the story? 3. Do you believe the Sarbanes Oxley Act could have prevented this fraud from happening?

Listening: The world after Enron The radio program The Lowdown is interviewing an authority on accounting about the consequences of the Enron scandal for the profession as a whole. Listen and take notes on the following points: 1. The fallout from Enron: ______________________________________________________________________________________ ______________________________________________________________________________________ 2. How accountants can cook the books: ______________________________________________________________________________________ ______________________________________________________________________________________ 3. Why Arthur Andersen’s behavior shocked the public: ______________________________________________________________________________________ ______________________________________________________________________________________ 4. Changes in the accounting profession since Enron: ______________________________________________________________________________________ ______________________________________________________________________________________ 5. Changes for accountants: ______________________________________________________________________________________ ______________________________________________________________________________________ 6. Changes for companies: ______________________________________________________________________________________ ______________________________________________________________________________________ Source: Career Express Business English 2

Materials by L Commandeur

1

University of Bayreuth

Unit 4 | Accounting (GB)

Business English 1

Reading: Paraphrasing Reread The Enron Story and find the phrases in the article expressing the ideas below: 1. As a consequence of the company’s collapse, all the people who worked for it lost their jobs. ______________________________________________________________________________________ ______________________________________________________________________________________ 2. Both American and international investors were eager to buy Enron stock. ______________________________________________________________________________________ ______________________________________________________________________________________ 3. Enron had been hiding liabilities in companies that were not mentioned in its financial statements. ______________________________________________________________________________________ ______________________________________________________________________________________ 4. The auditors may have overlooked the fraud or they may have been cooperating to cause it. ______________________________________________________________________________________ ______________________________________________________________________________________ 5. The chief executive officer said that he had not quit for reasons having to do with the company. ______________________________________________________________________________________ ______________________________________________________________________________________ 6. Enron confessed that it had been exaggerating the figures for its revenue. ______________________________________________________________________________________ ______________________________________________________________________________________ 7. A court decided that the executives had committed the crimes they were accused of. ______________________________________________________________________________________ ______________________________________________________________________________________ Source: Career Express Business English 2

Materials by L Commandeur

1

University of Bayreuth

Unit 4 | Accounting (GB)

Business English 1

Role Play: Making a dog a duck Say you have a dog, but you need to create a duck on the financial statements. Fortunately, there are specific accounting rules for what constitutes a duck: yellow feet, white covering, orange beak. So you take the dog and paint its feet yellow and its fur white and you paste an orange plastic beak on its nose, and then you say to your accountants, ‘This is a duck! Don’t you agree that it’s a duck?’ And the accountants say, ‘Yes, according to the rules, this is a duck.’ Everybody knows that it’s a dog, not a ...