Finance and financial system

Ex 2. Answer these questions: 

1.     What role does an accounting system play in an economy?

2.     In what phases is accounting broken down?

3.     What is an accounting equation?

4.     What is the most widely practiced principle of book – keeping?

5.     What does the balance sheet list?

6.     What is shown in the income statement?

7.     In what way does cash basis accounting differ from accounting on accrual basis?

Ex 3. Give derivatives of:

account                          manager                        equity

performance                   debit                              provide

transaction                     credit                             available

record                            practice                          calculation

Ex 4. Define whether the statements below true or false. Give your reasons.

1.     Balance sheet shown a not drawn up periodically.

2.     The balance sheet showed a lot of useful financial information.

3.     The accounting system is insignificant element of the economic system.

4.     Assets and liabilities, profits or losses are listed in financial statement.

5.     Accounting can be divided into two phases: processing and communication of financial information.

6.     Accounts can be prepared either on a cash or accrual basis.

7.     The double entry system divides each page into three halves.

8.     A firm’s sales, costs, and profits for a given period are shown in a balance sheet.

Ex 5. Comment on every requirement to the chief accountant of a company who will:

-         maintain accounts payable ledger

-         supervise banking and cash activities, supply contracts, reconciliation of bank statements

-         deal with local tax authorities

-         supervise the accounting department

-         cooperate with internal and external auditors