Accounting

1. Work in groups and answer the following questions

 What’s accounting?
- Control and recording system of expenses and income and other economic operations carried out
by a person, company or entity.
 Do you think accounting is important to keep a company floating? why/why not?
- If it is important, keep the accounting up to date and keep the expenses and income that the
company receives since it is necessary to have a better management of its resources.
 Do you know someone who works as an accountant? If so, who? Where does this person work? Do
you know what exactly this person does?
- If we know someone, it is the cousin Vanessa, the tasks that she performs are the income
statement and handles the accounting of a company works independently.

2. a. Match these accounting firms with their definition.

A. Public Accounting 1. firms typically employ Certified Public

Accountants (CPAs).

B. Tax Accounting 2. firms use accounting skills and legal

policies
to uncover fraudulent and illegal activities.

C. Forensic accounting 3. firms complete fundamental accounting

tasks for small and medium-sized companies.
 D. Bookkeeping 4. firms focus on tax preparation and
planning for companies of all sizes, and also
for individuals.

3.1. Speaking practice: talk about accountants

Work in groups of 4 people and share your opinion with the rest of the class. Discuss the
questions below:
 What jobs do accountants do?
- Review custom An income always implies an increase in business assets, as long as
this increase is not due to contributions from partners. er ledgers.
- Elaborar el balance de los libros financieros.
- Redactar informes sobre el estado financiero de sus clientes.

 Describe the educational requirements for accountants.

- Education
- Experience
- Exam
- Continuing education

 Share with the group in a short oral presentation of jobs and duties for an accountant.

3.2. Listening practice

Before watching the video, answer these questions:

 find the definition of “profit” and give some examples.

- It is a benefit that is obtained in a matter or in a business. Is a benefit or gain, usually
monetary? An example of profit is the money a business has left after paying their expenses.
The amount of money received for goods and services minus the amount spent on the same;
excess revenue.

 look into a dictionary the concepts of internal, external, and government.

- Internal users are people within a business organization who use financial information.
Examples of internal users are owners, managers, and employees.
External users are people outside the business entity (organization) who use accounting
information.
Internal users are those within an organization who use financial information to make day-to-
day decisions. Internal users include managers and other employees who use financial
information to confirm past results and help make adjustments for future activities.
 - External users are people outside the business entity (organization) who use accounting
information. Examples of external users are suppliers, banks, customers, investors, potential
investors, and tax authorities.
- Government accounting is the process of recording, analyzing, classifying, summarizing
communicating and interpreting financial information about government in aggregate and in
detail reflecting transactions and other economic events involving the receipt, spending,
transfer, usability and disposition of assets and liabilities.

 Discuss what’s the relation between the government and companies?

- The main goal of businesses is to make a profit and governments’ goal is to ensure economic
stability and growth. Both of them are different but very co-dependent.
- the government and organizations or businesses always try to influence and persuade each
other in many ways for various matters. A balanced relationship between the government and
businesses is required for the welfare of the economy and the nation. Organizations try to
force the government to act in ways that benefit the business activities. Of Course, for that,
an organization must go through legitimately.

Now, watch the video, make notes and practice your listening skill following the link to the video:

https://www.youtube.com/watch?v=Yj24JwZVd54

After watching the video, discuss and answer the following questions:

 What is the importance of having a good accounting process in a company?

- The importance is that we can attract three types of internal, external and governmental
people, who will be of great help to tell the story of our company.

 What is the purpose of a business?

- The purpose of a company is to attract people so that it is recognized and acquires more
income.

 How could you keep your business floating?

- Having a good management of finances, thus also keeping an excellent accounting of income and
expenses each month of the company.

 What factors you should take into account when having a business?
- The public to which our product will benefit, the sector where it is located, the prices we
handle and the publicity we give to it.

3.3. Reading practice: Reading about the Accounting Cycle.

Before reading you should complete the following meaning chart:

Spelling Meaning Synonyms

It is the fulfillment of obligations, or

care when making decisions or doing
something. Responsibility is also the fact
of being responsible for someone or
liability something Commitment
 Financial document that is used to
measure the ability of a company to
income generate income and profits Income Balance
statement

Stockholders 'equity reflects the owners'

investment in an entity and generally
consists of their contributions plus or
minus their retained earnings or
owner's equity accumulated losses. net asset value.

Represents all the assets and rights of

a company, acquired in the past and
with which they hope to obtain future
asset benefits. Diligent

Amount of money that is needed to meet

a certain number of expenses necessary
budget to undertake a project.
Precondition

State in which the money can be found in

the economic sphere in legal course, being
able to count on it in the short term to
cash assume different payment obligations. Money

Value that is given to a consumption of

production factors within the realization
of a good or a service as an economic
cost activity Price

Is the loss of value of an asset as a

depreciation result of its wear and tear over time
Rejection

An income always implies an increase in

business assets, as long as this increase
is not due to contributions from
revenue partners.
Money

They are all the profits that are added

to the total set of the budget of an
entity, whether public or private,
tax individual or group. Contribution

payroll Pay
 It is the document that certifies that
the company has complied with paying
the remuneration to its employees.

invoice
An invoice is a commercial document that
indicates the sale of a good or service.
It has legal and fiscal validity. Abstract

Read the text and complete the activities below.

What is the accounting cycle?
The accounting cycle is the process of recording
your business’s financial activities. The
accounting cycle looks back in time at the end of
a designated period. The cycle includes several
steps, starting when a transaction occurs. The
cycle ends when you record the transaction as
part of your financial statements.
The accounting cycle makes accounting easier,
breaking your bookkeeping down into smaller
tasks. It helps you see what you need to
accomplish next.

What are the steps of the accounting cycle?

is the loss of value of an asset as a result of its
wear and tear over timeThe following accounting
cycle steps can help you keep financial records.

1. Identify transactions: First, separate your business transactions from all of the
transactions you made. You only want to include transactions related to your company in your
financial records. For example, you won’t record your grocery bill as a business expense in your
books.

Use source documents to identify business transactions, such as receipts and invoices. Save these
kinds of financial documents to support your records. As you identify business transactions, decide
which account they fall under.

2. Record transactions in your journal: The journal is where you initially record business
transactions. It is a running list of financial activities, like a checkbook. Track transactions in
your journal chronologically as they happen.

If you use double-entry bookkeeping, record two entries for each transaction. Enter a debit for
one account and a credit for another. The debit and credit should be equal.

3. Post entries to the general ledger: The general ledger is also known as the book of final
entry. General ledger entries are changes made to each account in your books. Using your journal,
organize transactions into different accounts. For example, if a customer paid for a product with
cash, enter the transaction under the cash account in your books.
 4. Unadjusted trial balance: For your books to be accurate, the debit and credit entries must
be equal. Use an unadjusted trial balance to test if your debits and credits match.

Make a note of each account balance. Add all the debit balances together and all the credit
balances together. If the two totals are not the same, you might have an error in your books.
Or, you might need to make adjusting entries.

5. Adjusting entries: At the end of an accounting period, you might have incurred expenses but
not paid for them yet. And, you might have earned income but not collected it yet. Use adjusting
entries to recognize transactions that have occurred but not been recorded.

For example, you earned interest on a bank account balance. You have not recorded the interest
in your books, but it appears on your bank statement. Use an adjusted entry to recognize the
interest in your books.

6. Adjusted trial balance: Do an adjusted trial balance after making adjusting entries and
before creating financial statements. This step tests to see if the debits and credits match
after making adjusting entries.

7. Create financial statements: Once your accounts are up-to-date, create statements. The
following are common financial statements for small business:

Income statements compare your profits and losses for the period.
Balance sheets determine progress by detailing assets, liabilities, and equity. Cash flow statements show
money coming into and out of the business.

Use your financial statements to measure performance, make improvements, and set goals. You
can also use statements to talk with lenders and negotiate terms with vendors.

8. Close your books: The final step in the accounting cycle is to close your accounting books.
Closing your books wraps up financial activities for the period. Do tasks like updating accounts
payable, reconciling accounts, reviewing your petty cash fund, and counting inventory.

When you close your books, you should get your accounting set up for the next period. Decide which
processes are moving your business forward. Create a calendar for completing future tasks. File any
financial documents from the last period and get rid of old documents that are no longer useful.

According to the information from the text, tick the following statements, True (T) or False (F)
 The accounting cycle corresponds to the recording of the business’s financial activities. (T)

 The checkbook is one of the tools used to do the post entries record. (F)
 As the books need to be accurate, an unadjusted trial balance verifies whether debits and
credits match. (T)
 The statements are created as the accounts are up-to-date. (T)

 The accounting set up for the next period is part of the record transactions process. (T)
Based on the reading, describe each one of the following accounting concepts:
 Transaction

A financial transaction is an agreement, communication or movement carried out between a buyer and a
seller in which an asset is exchanged against a payment. It involves a change in the financial status of
two or more businesses or individuals

 Posting

The destination of the operation must be consistent with the activity of the company and its future
development strategy, if there is no consistency, rejection is almost automatic. The reason is very simple,
when the destination of the funds is not clear, in most cases, either the company is financing business
losses, or it is structuring its financing poorly, and in both cases the consequences are as dreaded liquidity
strains that lead companies to disappear.

 Trial balance
it's a balance report debits and credits from both real or balance sheet accounts as well as income or
profit and loss accounts, that are shown to determine that the accounting balance exists in the
application of the double entry for the different records of economic events.
 Journal entries

refers to the form that is used to record your business transactions in the general ledger.

 Financial statements

These are reports that are made in order to obtain an image of the financial situation of a company.
These reports show the accounting year of a year, or of a certain period that you want to know, of the
company's operations

 Worksheet

A spreadsheet is a type of document that allows you to manipulate numeric and alphanumeric data
arranged in the form of tables made up of cells, which are usually organized in a matrix of rows and
columns.

 Adjusting entries
It is an entry or exit movement of articles to the warehouse. It is functional to add the initial inventory,
losses or increases of merchandise.

 Closing the books

Adjust the accounts of a ledger so that their balances are accurate and true; transfer the balances of
the income statement to the "profit and loss" account; and in general, make all the necessary entries to
prepare the balance sheet and the operating account or the profit and loss statement, in order to close
the accounts for the corresponding year.
3.4 Writing practice

Create a job position advertising for an accountant. As shown in the example