Text A — Accounting: The Basis for Business Decision

Comprehension of Text A (1) Accounting is not the same as bookkeeping. * bookkeeping: Bookkeeping is the job or activity of keeping an accurate record of the money that is spent and received by a business or other organization.

Text A — Accounting: The Basis for Business Decision (2) Personal financial planning, education expenses, loans, car payments, income taxes, and …. *income tax: Income tax is a certain percentage of your income that you have to pay regularly to the government.

Text A — Accounting: The Basis for Business Decision (3) Virtually all businesses and most individuals keep accounting records to aid in making decisions. *virtually: You can use virtually to indicate that something is so nearly true that for most purposes it can be regarded as true. (=almost) e.g. It would have been virtually impossible to research all the information.

Text A — Accounting: The Basis for Business Decision (4) This means analyzing the financial statements of the business and keeping up with developments in the business press — for example, The Wall Street Journal and Business Week. * statement: a printed document showing how much money has been paid into and taken out of a bank or building society account.

Text A — Accounting: The Basis for Business Decision e.g. You can pay bills over the Internet. Additionally, you can check your balance or order statements.

Text A — Accounting: The Basis for Business Decision (5) Before making a loan, creditors (lenders) such as banks determine the borrower’s ability to meet scheduled payments. *creditor: a person to whom money is owed by a debtor

Text A — Accounting: The Basis for Business Decision e.g. Following the Asian Crisis, foreign creditors and investors have demanded that business groups have more transparent operations and stronger corporate governance.

Text A — Accounting: The Basis for Business Decision *schedule: plan the time and place for events e.g. Has the match been scheduled? scheduled *scheduled payments: arrangement for planned payments for goods or services at fixed times

Text A — Accounting: The Basis for Business Decision (6) To borrow from a bank before striking it rich, Harold Nix probably had to document his income and financial position. * document: [v] prove something by documents

Text A — Accounting: The Basis for Business Decision (7) Most organizations face government regulation. * regulation: the controlling of an activity or process, usually by means of rules

Text A — Accounting: The Basis for Business Decision e.g. The European Union has proposed new regulations to control the hours worked by its employees. (=rules)

Text A — Accounting: The Basis for Business Decision regulator: a person or organization appointed by a government to regulate an area of activity such as banking or industry. e.g. An independent regulator will be appointed to ensure fair competition.

Text A — Accounting: The Basis for Business Decision securities: stocks, shares, bonds, or other certificates that you buy in order to earn regular interest from them or to sell them later for a profit e.g. government securities: money lent to a government

Text A — Accounting: The Basis for Business Decision (8) Local, state and federal governments levy taxes on individuals and businesses. levy: demand, collect a tax or other sum of money from people or organizations by authority or force e.g. Taxes should not be levied without the authority of Parliament.

Text A — Accounting: The Basis for Business Decision (9) Non-profit organizations … use accounting information in much the same way as profit-oriented businesses do. *-oriented: -directed e.g. quality/exam-oriented education export/import-oriented economy.

Outline of Text A. Part1. Definition of accounting (Para.1) Accounting is the information system that measures business activities, processes that information into reports, and communicates the results to decision-makers.

Outline of Text A. Part1. Definition of accounting (Para.1) To be precise, it is the activity of keeping detailed records of the amounts of money a business or person receives and spends.

Part2. Who keep accounting records? (Para.2-9) All businesses and most individuals keep accounting records to aid in making decisions. (1) Individuals (2) Businesses

Part2. Who keep accounting records? (Para.2-9) (3) Investors (4) Creditors (5) Government Regulatory Agencies (6) Taxing Authorities (7) Non-profit Organizations

Part3. Classification of accounting (Para.10-12) (1) Accounting is classified into two fields: financial accounting and management accounting. (2) Different focuses of financial accounting and management accounting.

Part3. Classification of accounting (Para.10-12) a. Financial accounting focuses on information for people outside the firm. b. Management accounting focuses on information for internal decision-makers.

Text B — Internal Control Outline of Text B Part1. One case to show the importance of the internal control (Para.1-4)

Part2. Definition and purposes of the internal control (Para.5-9) Internal control is the organizational plan and all the related measures that an entity adopts to: (1) safeguard the assets the business uses in its operations

Part2. Definition and Purposes of the internal control (Para.5-9) (2) encourage adherence to company policies (3) promote operational efficiency (obtain the best outcome at the lowest cost) (4) ensure accurate and reliable accounting records

Part3. How can internal controls be most effective? (Para.10-14) (1) Internal controls are most effective when employees at all levels adopt the organization’s goals and ethical standards. (2) Two characteristics of an effective system of internal control.

Part3. How can internal controls be most effective? (Para.10-14) a. Competent, reliable and ethical employees. b. Clear definition of duties and assignment of responsibilities.

Comprehension of Text B. * venerable: deserving respect because of age, character, associations, etc. e.g. Columbia was a young city compared with venerable Charleston. He is a venerable old man with white hair.

Comprehension of Text B. * bring … to its knees: force somebody to submit; almost completely destroyed something e.g. The country was being brought to its knees by the loss of 2.4 million manufacturing jobs.

Comprehension of Text B. securities: stocks, shares, bonds, or other certificates that you buy in order to earn regular interest from them or to sell them later for a profit e.g. government securities: money lent to a government

Comprehension of Text B. audit: [v]or [n] examine the accounts officially in order to make sure that they have been done correctly e.g. Each year they audit our accounts and certify them as being true and fair.

Comprehension of Text B. The bank first learned of the problem when it carried out an internal audit.

Comprehension of Text B. auditor: accountant who officially examines the accounts of organizations e.g. Auditors said they had uncovered evidence of fraud.

Comprehension of Text B. adhere to: ① stick fast to: Glue and paste are used to make one surface adhere to another. ② remain faithful to; support firmly: He urged them to adhere to the values of Islam which defend the dignity of man.

Comprehension of Text B. payroll: list of persons to be paid and the amounts due to each e.g. They had 87,000 employees on the payroll.

Comprehension of Text B. * depreciation: lessening of value or estimation e.g. Inflation is rising rapidly; the yuan is depreciating.