IV. For Russian terms in a column A find corresponding English definitions in column B.

V. Fill in the gaps using the words given:

sales

firm

expenses

payment

operations

income

revenues

shareholder

goodwill

inventory

intangible

cash

patents

current

buildings

funds

fixed

real

estate

allocation

A firm receives _____ for goods and services it provides to others. It also makes payments to employees, suppliers, and others who have contributed to its _____. A firm receives its _____ in payment from others over a period of time. They are mostly a flow of _____ from sales by the firm. Resources that a firm uses up in the pursuit of revenues are _____. Wages, rent, and utilities are commonly incurred business expenses. The income _____ is a useful tool. Anyone can tell at a glance what the _____ earned, what its main expenses were, and how earnings and expenses compared to _____.

Resource _____, the second function of corporate finance, is the investment of _____ with the intent of increasing _____ wealth over time. Two basic categories of investments are current assets and fixed assets. _____ assets include _____, _____, and accounts receivable. Examples of _____ assets are _____, _____ _____, and _____. In addition, the resource allocation function is concerned with _____ assets such as _____, _____, workers, and brand names.

VI. Are the following statements true or false?

1. The balance sheet of any company is made up of its assets plus any cash on hand.

2. The company’s debts are listed as liabilities.

3. A balance sheet is the summary of what the company owes and what it owns at a given point of time.

4. On the right the company lists everything it owns.

5. «Fixed assets» called property; plant and equipment are listed on the left side of the balance sheet.

6. The company’s liabilities are not always included in the balance sheet.

7. The company’s shareholders may look at the lists on both sides of the balance sheet to see what they really own.

8. Shareholders have no right to calculate the stockholders’ equity.

9. Accounting gives the shareholders a clear picture of the company’s financial position.

10. Profit and loss statement is the overview of a company’s day-to-day activities.

11. The profit of a company includes its expenses and revenues.

12. There are many ways to determine the depreciation of a company’s fixed assets.

13. Analysis of company’s cash flow helps to understand its activity.

VII. Complete the sentences referring to the information from the text.

TOPIC 8.

MONEY AND ITS FUNCTIONS

The main feature of money is its acceptance as the means of payment or medium of exchange. Nevertheless, money has other functions. It is a standard of value, a unit of account, a store of value and a standard of deferred payment.

The Medium of Exchange.Money, the medium of exchange, is used in one-half of almost all exchange. Money is the medium through which people exchange goods and services. However, this has not always been true. In primitive societies a system of barter was used. In barter economy there is no medium of exchange. Barter was a system of direct exchange of one good or service for another. Goods are traded directly or swapped for other goods. In a barter economy, the seller and the buyer each must want something the other has to offer. Each person is simultaneously a seller and a buyer. There is a double coincidence of wants. Barter was a very unsatisfactory system because people's precise needs seldom coincided.

A Measure of Value. Money can also serve as a standard of value. Society considers it convenient to use a monetary unit to determine relative costs of different goods and services. In this function money appears as the unit of account, is the unit in which prices are quoted and accounts are kept.

Store of Value .To be accepted in exchange, money has to be a store of value. Money is a store of value because it can be used to make purchases in the future. Houses, stamp collections, and interest-bearing bank accounts all serve as stores of value. Since money pays no interest and its real purchasing power is eroded by inflation, there are almost certainly better ways to store value.

Finally, money serves as a standard of deferred payment or a unit of account over time. It is the unit in which prices are quoted and accounts are kept. In Britain prices are quoted in pounds sterling, in USA in dollars. It is usually convenient to use the units in which the medium of exchange is measured as the unit of account as well.

VOCABULARY

the means of payment - средство платежа

medium of exchange - средство обращения

a standard of value - мера стоимости

a unit of account - единица учета

a store of value - средство сбережения (сохранения стоимости)

a standard of deferred payment - средство погашения долга

subsequently - впоследствии

a barter economy - бартерная экономика

to swap (to exchange, to barter) - обменивать, менять

to hand over in exchange - передать, вручить в обмен

a double coincidence of wants - двойное совпадение потребностей

a monetary unit - денежная единица

to remind of - напоминать

to be worthless - обесцениваться

an interest-bearing bank account - счет в банке с выплатой процентов

to pay interest - приносить процентный доход

to erode зд. - фактически уменьшаться

hard currency - твердая (конвертируемая) валюта

soft currency - неконвертируемая валюта

invariably - неизменно, постоянно

commodity money деньги — товар

token money - символические деньги (дензнаки, жетоны, и т.п.)

to melt down - расплавить

tiny costs - мизерные затраты

to supplement - дополнять

legal tender - законное платежное средство

IOU money (I Owe You-я вам должен) деньги — долговое обязательство

a bank deposit - вклад в банке

DIFFERENT KINDS OF MONEY

There are different kinds of money. The most important types of money are commodity money, credit money, and fiat money.

A token money is a means of payment whose value or purchasing power as money greatly exceeds its cost of production or value in uses other than as money.

Society enforces the use of token money by making it legal tender. The law says it must be accepted as a means of payment. In modem economies, token money is supplemented by IOU money.

An IOU money is a medium of exchange based on the debt of a private firm or individual.

A bank deposit is IOU money because it is a debt of the bank. When you have a bank deposit the bank owes you money. You can write a cheque to yourself or a third party and the bank is obliged to pay whenever the cheque is presented. Bank deposits are a medium of exchange because they are generally accepted as payment.

The value of commodity money is about equal to the value of the material contained in it. The principal materials used for this type of money have been gold, silver, and copper.

Credit money are documents with promises by the issuer to pay an equivalent value in the standard monetary metal.

Fiat money is paper money the value of which is fixed by government. Most minor coins in circulation are also a form of fiat money, because the value of the material of which they are made is usually less than their value as money.

Both the fiat and credit forms of money are generally made acceptable through a government decree that all creditors must take the money in settlement of debts.

Fiat money in the form of banknotes is referred to as legal tender.

A coin is a piece of metal, usually disc-shaped, which bears lettering, designs or numbers showing its value. Until the eighteenth and nineteenth centuries coins were given monetary worth based on the exact amount of metal contained in them, but most modern coins are based on face value, the value that governments choose to give them, irrespective of the actual metal content. Coins have been made of gold, silver, copper, aluminium, nickel, lead, zinc, plastic, and in China even from pressed tea leaves.

Most governments now issue paper money in the form of notes, which are really “promises to pay”. Paper money is obviously easier to handle and much more convenient in the modern world. Cheques, bankers’ cards, and credit cards are being used increasingly and it is possible to imagine a world where “money” in the form of coins and paper currency will no longer be used. Banknotes are usually made from special high-quality paper, with watermarks, metallic strips, and other features against forgery. Highly sophisticated printing techniques are used, and banknote designs have elements that are hard to copy. Fronts and backs of notes are printed separately, and serial numbers are added later.

Other arrangements such as checks and money orders are not legal tender. They perform the function of substitute money and are known as instruments of credit. Credit is offered only when creditors believe that they get a good chance of obtaining legal tender when they present such instruments at a bank or other authorized institution. If a man’s assets are known to be considerable, then the credit will be good. If his assets are in doubt, it may be difficult for him to obtain large sums of credit or even to pay for goods with a check.

VOCABULARY

a buying (purchasing) power – покупательная способность

a measure of value – мера стоимостиa medium of exchange – средство обмена

a store of value – средство накопления

a unit of account – единица расчета

bargain – удачная сделанная покупка (с точки зрения покупателя)

budget – бюджет

cash – наличные

cheap – дешевый

coin – монета

commodity money – 1) товарные деньги; 2) обеспеченные товарами, золотом деньги

cost, costs – стоимость, издержки

cost of living – стоимость жизни

currency – 1) ден. обращение, валюта; 2) деньги (наличные)

expenses – расходы

expensive – дорогой

fare – оплата проезда

fee – гонорар

free, free of charge – бесплатный

income – доход

IOU money – вексельные, долговые деньги

legal tender – законное платежное средство

paper currency – бумажные деньги

plastic cards – пластиковые карты

pocket money – карманные расходы

price – цена

rich – богатый

salary – заработная плата, оклад

standard of living – уровень жизни

to be in debt – быть в долгу

to borrow – брать взаймы

to buy (bought) – покупать

to cost (cost) – стоить

to counterfeit – подделывать

to earn – зарабатывать

to exchange – обменивать

to invest, investments – инвестировать, инвестиции

to lend (lent) – давать взаймы (ссужать)

to make a fortune – сделать состояние

to owe – быть должным

to pay (paid) – платить

to pay off a debt – выплатить долг

to purchase , a purchase – покупать, покупка

to save (for a rainy day) – копить, откладывать (на черный день)

to spend (spent) – тратить

to store up – копить, накапливать

to waste – тратить впустую

token money – символические, знаковые деньги

value – ценность

wage – заработная плата

COMPREHENSION CHECK

I. Give English equivalents to the following:

Cредство платежа, средство обращения, мера стоимости, средство сбережения (средство сохранения сто­имости), единица учета, средство погашения долга, в обмен на, может быть впоследствии использовано, обмениваться товарами и услугами, бартерная экономика, измеряться, обесцененный, платить проценты, покупательная способность, промышленное использование, потребительское использование, деньги — товар, денежные знаки (символические деньги), денежная стоимость, ограничение права, вклад в банке, банковская ссуда, законное платежное средство, долговое обязательство, девальвация, денежная масса, покупательная способность.

II. Read the words and guess their meanings:

Exchange labour services for money, you must hand over in exchange a good or service, a double coincidence of wants, spend a lot of time and effor, make mutually satisfactory swap, a barter economy is wasteful; commodity generally accepted in payment for goods, prices are quoted and accounts are kept, its purchasing power is eroded by inflation, it's usually but not invariably, convenient, cut back on other uses, exceeds its cost of production, by collectively agreeing, the survival of token money, society enforces the use of token money, token money is supplemented by IOU money, interest-bearing bank accounts.

III. Read and translate the terms:

IV. Complete these sentences using the words from the list below and translate the sentences into Russian:

(Rate, services, money, exchange, property, prices, a store of wealth, economy, employment)

The quantity of _______ in an economy is central to determining the state of that ________ : - it affects the level of _____, the _____ of economic growth and the level of _______ . It is a medium of ______ that people will accept for their goods or ______ and a unit of account for prices or debts. In addition, it can be used like _____ or precious metals – as ______ ______ that people can save for future purchases.

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