Double entry bookkeeping

In any exchange of money, goods, or services, more than one person is involved. Thus there must be two parts to every transaction. In order to make a complete bookkeeping record of a transaction, entries must be made in two different accounts to keep the ins and out balanced.

For example, Daniels can pay her bill on November 6. In addition to recording payment in his cash account, Murphy also records it in another account – an account receivable in which he lists all her charge purchases. Thus his record of this transaction is complete. He has noted that he received a certain sum of money (by the debit to the cash account) and where he obtained the money (by the credit to Daniel’s account receivable). This is called double entry bookkeeping. Double entry does not mean that the same transaction is entered twice but that both the debit and the credit side of the transaction are recorded. All entries in one account must be offset by entries in another account or accounts.

The simplest set of double entry books consists of a journal and a ledger. When a transaction takes place the bookkeeper first enters it in the journal. Transactions are entered as they occur. The bookkeeper regularly transfers the information in the journal to the various accounts, which are kept in the ledger. This is known as posting. Murphy made entries in his journal as the transactions took place. Then he posted those entries in the appropriate accounts in his ledger.

These bookkeeping procedures furnish the information necessary to prepare three types of statements that show the financial condition of an individual or a business. They are the trial balance, the profit and loss statement, and the balance sheet. These statements usually are prepared at the end of a specified period, such as the calendar month, quarter year, or other desired interval. The trial balance is a list of debit and credit balances found in all accounts. The total of the debits must equal the total of the credits. Disagreement between totals shows there is an error (or errors) in the records. The profit and loss statement tells whether the individual or business has made a profit for the period. In its simplest form it looks like this: The balance sheet is a list of all the assets and liabilities on the date of the statement. The amount by which the total assets exceed total liabilities is known as the net worth.

2.2.Для перевірки правильності розуміння тексту, виконайте наступні ситуаційні вправи:

Ситуація 3. Складіть історію із наступних фрагментів, але ви, як оповідач, віддаєте перевагу офіційним і лаконічним висловлюванням:

1. Our bank charges a fixed rate for each business deal or condition.

2. James left the restaurant, settling his account by credit card just the same as any of their bank customers.

3. Cuts in prices for milk, butter, and cheese will be compensated by direct payments to farmers – it is his main responsibility.

4. The explosion happened at 5.30 a. m; three and a half hours before the bank opened on that unfortunate day.

5. I’d like to move $500 from my checking account (поточний рахунок) to my credit account – says a beautiful lady before the counter.

6. We have had a few situations in which the staff expressed different opinions on accounting, but we are still good friends and good partners at the tennis court.

Ситуація 4. Деяким людям до вподоби точні формулювання, у такому разі вони наступні вислови замінять на інші:

1. The accounting system in which each transaction is recorded twice, as a debit in one account and as a credit in another is called………….

2. ……… is the action or process of buying or selling something.

3. A statement that shows how much money you owe for goods or services is known as a ……….

4. ………… is a book containing details of transactions of a business in the order that they happen.

5. A book in which a business, bank etc. records how much money it receives and spends is a ………..

6. ……….. is a document showing a company’s financial position and wealth(багатство) at a particular time.

3.1. Для ознайомлення з поняттям про систему часів англійських дієслів вивчіть Units 26-27 підручника R. Murphy “English Grammar in Use” Основна література: [3].

3.2. Щоб навчитись вживати модальне дієслово can, виконайте наступні ситуаційні вправи: