Chapter 2: Careers in the field of accountancy

annual financial statements

the set of accounts which are prepared each year

auditor

a specialist whose job is to carefully check the accounts and accounting practices of a company

bookkeeper

a person, who may or may not be qualified, that records the financial transactions of a business

chartered accountant (CA)

a fully qualified accountant, holding current certification

code of conduct

a set of rules (often used within a company) which show the correct way to behave

confidentiality

the state of being secret and/or kept secret

creative accounting

the use of holes in financial law to have an advantage or to show figures in a deceptive way

income tax

the tax which is due on personal earnings

local accounting standards

the set of rules and laws for a country which govern how accounts should be prepared

management accountant

a senior member of the accounting team, who liaises with company owners / directors and advises on the financial aspects of any planned action

payroll clerk

the member of the accounting team who deals with employees

purchase ledger clerk

(U.S. accounts payable) the member of the accounting team who deals with suppliers, issues payment for goods and services and keeps track of expenditure

sales ledger clerk

(U.S. accounts receivable) the member of the accounting team who deals with sales, raises invoices and collects payment

tax advisor

a specialist who is able to give advice on matters of taxation

VAT (value added tax)

the tax which is due on the difference between the value of a product or service and the cost of its production

payroll

a list of all employees and their wages

journal

an accounting record where all business transactions are initally entered

expense

money that is spent to purchase goods or services provided by someone else

balance sheet

a detailed summary of a person's or a company's financial condition at a specific point in time, taking into account their assets, liabilities, etc.

property

something that is legally owned by a person or company

liabilities

an obligation to settle a debt; money owed to someone

equity

this word has 2 meanings: "stock (shares)" and "net worth"

cash flow

the balance of cash receipts minus cash payments over a given period of time

liquid assets

cash or something that is easily convertible into cash

net income

money remaining after all expenses and taxes have been paid

assets

anything owned by a company –cash, buildings, machines, etc

tax accounting

calculating how much tax an individual or a company should pay or trying reduce this figure

auditing

checking and evaluating financial records

indirect cost

determining the unit cost of a manufactured product, including _____

financial accounting

keeping financial records and preparing financial statements

liabilities

money that a company will have to pay to someone else – bills, debts, interest, taxes, etc

bookkeeping

recording transactions (purchases and sales) in ledgers

income

the money that a company receives from supplying goods or services

expenditure

the money that a company spends

management accounting

the use of company’s accounting data by its manager to run the business

commission

A charge for arranging a transaction (e.g. buying or selling securities)

fee

A charge for a service performed by a bank

premiums

Payments for an insurance policy

Amortization

A reduction in the value of an asset, charge against profits

net

An adjective meaning after all deductions have been made

Consolidated

An adjective meaning for a whole group of companies

short-term

An adjective meaning one year or less in financial statements

minority interests

Part-ownership (less than 50%) of other companies

Intangible assets

Things of value that cannot be physically touched, such as reputation (goodwill), brand names and trademarks

shareholders’ equity

The net worth of a company – the amount by which an asset exceed liabilities

accounting

_____ involves recording and summarizing an organization’s transactions or business deal, such as purchases and sales, and reporting them in the form of financial statements.

recording

accounting involves _____ and summarizing an organization’s transactions or business deal, such as purchases and sales, and reporting them in the form of financial statements.

transactions

accounting involves recording and summarizing an organization’s _____ or business deal, such as purchases and sales, and reporting them in the form of financial statements.

accountancy

In many countries, the accounting or _____ profession has professional organizations which operate their own training and examination systems, and make technical and ethical rules: these relate to accept ways of doing things.

bookkeeping

_____ is the day-to-day recording of transactions.

financial accounting

_____ included bookkeeping, and preparing financial statements for shareholders and creditors — people or organizations who have lent money to a company.

management accounting

_____ involves the use of accounting data by managers, for making plans and decisions.

auditing

_____ means examining a company's systems of control and the accuracy or exactness of its records, looking for errors or possible fraud: where the company may have deliberately given false information.

accuracy

auditing means examining a company's systems of control and the _____ or exactness of its records, looking for errors or possible fraud: where the company may have deliberately given false information.

internal audit

An _____ is carried out by a company's own accountants or internal auditors.

external audit

An _____ is done by independent auditors: auditors who are not employees of the company.

external audit

The _____ examines the truth and fairness of financial statements. It tries to prevent what is called 'creative accounting', which means recording transactions and values in a way that produces a false result — usually an artificially high profit

true and fair view

The accounts of British companies have to give a _____ of their financial situation. This means that the financial statements must give a correct and reasonable picture of the company's current condition.

laws

In most continental European countries, and in Japan, there are _____ relating to accounting, established by the government.

follow rules

In the US, companies whose stocks are traded on public stock exchanges have to ______ set by the Securities and Exchange Commission (SEC), a government agency

standard

In Britain, the rules, which are called _____, have been established by independent organizations such as the Accounting Standards Board (ASB), and by the accountancy profession itself.

apply

Companies are expected to _____ or use these standards in their annual accounts in order to give a true and fair view.

annual accounts

Companies are expected to apply or use these standards in their _____ in order to give a true and fair view.

bookkeeping

I record all the purchases and sales made by this department.

external auditing

This month, I’m examining the accounts of a large company

management accounting

I analyze the sales figures from the different departments and make decisions about our future activities

accounting

I’m responsible for preparing our annual balance sheet

financial accounting

When the accounts are complete, I check them before they are presented to the external auditors.