I. Reading: What Does an Accountant Do? *Teacher’s Copy*
Most people don’t realize the importance of the accounting department in keeping a business operating without problems and delays. That’s probably because accountants oversee many of the back-office functions in a business — as opposed to sales, for example, which is front-line activity, out in the open and in the line of fire. Go into any retail store, and you’re in the thick of sales activities. But have you ever seen a company’s accounting department in action?
The following list gives you a pretty clear idea of the back-office functions that accountants perform:
- Payroll: The total wages and salaries earned by every employee every pay period, which are called gross wages or gross earnings, have to be calculated. Based on detailed private information in personnel files and earnings-to-date information, the correct amounts for income taxes and several other deductions from gross wages have to be determined.
Stubs, which report various information are produced each pay period and given to the employee. The total amounts of withheld income taxes, pension plan contributions, and employment insurance premiums imposed on the employee and employer have to be paid to the government on time. Retirement, vacation, sick pay, and other benefits that employees earn have to be updated every pay period.
Payroll is a complex and critical function that the accounting department performs. Many businesses outsource payroll functions to companies or banks that specialize in this area.
- Cash collections: All cash received from sales and from all other sources has to be carefully identified and recorded, not only in the cash account but also in the appropriate account for the source of the cash received. The accounting department makes sure that the cash is deposited in the appropriate business chequing accounts and that the business keeps an adequate amount of coin and currency on hand for making change for customers.
Accountants balance the business’s chequebook and control access to incoming cash receipts. In larger organizations, the treasurer may be responsible for some of these cash flow and cash-handling functions.
- Cash payments (disbursements): A business writes many cheques during the course of a year. The accounting department prepares all these cheques for the signatures of the business officers who are authorized to sign cheques. The accounting department keeps all the supporting business documents and files to know when the cheques should be paid, makes sure that the amount to be paid is correct, and forwards the cheques for signature.
- Procurement and inventory: Accountants usually are responsible for keeping track of all purchase orders that have been placed for inventory (products to be sold by the business) and all other assets and services that the business buys. A typical business makes many purchases during the course of a year, many of them on credit. This area of responsibility includes keeping files on all liabilities that arise from purchases on credit so that cash payments are processed on time.
The accounting department also keeps detailed records on all products that the business holds for sale and, when the products are sold, records the cost of the goods sold.
- Property accounting: A typical business owns many different substantial long-term assets called property, plant, and equipment — including office furniture and equipment, retail display cabinets, computers, machinery and tools, vehicles (autos and trucks), buildings, and land.
Except for relatively small-cost items, a business maintains detailed records of its property, both for controlling the use of the assets and for determining the appropriate amount of depreciation for accounting and tax calculations. The accounting department keeps these property records.
II. Vocabulary & Definitions
1. retail
the selling of goods to consumers; usually in small quantities and not for resale
EXAMPLE SENTENCE:
Go into any retail store, and you’re in the thick of sales activities.
2. salary
something that remunerates
EXAMPLE SENTENCE:
Mercedes Benz offered Mr. Hamilton a higher salary.
3. calculate
make a mathematical calculation or computation
EXAMPLE SENTENCE:
The total wages and salaries earned by every employee every pay period, which are called gross wages or gross earnings, have to be calculated.
4. personnel
group of people willing to obey orders
EXAMPLE SENTENCE:
Based on detailed private information in personnel files and earnings-to-date information, the correct amounts for income taxes and several other deductions from gross wages have to be determined.
5. deduction
the act of subtracting (removing a part from the whole)
EXAMPLE SENTENCE:
Lower deductions may mean higher tax bills, which would increase government revenue.
6. withhold
hold back; refuse to hand over or share
EXAMPLE SENTENCE:
The total amounts of withheld income taxes, pension plan contributions, and employment insurance premiums imposed on the employee and employer have to be paid to the government on time.
7. pension
a regular payment to a person that is intended to allow them to subsist without working
EXAMPLE SENTENCE:
Until recently, Greek public employees were paid pensions that equalled nearly a full salary for life beginning at age 57.
8. benefit
a payment made or an entitlement available in accordance with a wage agreement, an insurance policy, or a public assistance program
EXAMPLE SENTENCE:
Retirement, vacation, sick pay, and other benefits that employees earn have to be updated every pay period.
9. specialize
become more focus on an area of activity or field of study
EXAMPLE SENTENCE:
Many businesses outsource payroll functions to companies or banks that specialize in this area.
10. record
anything (such as a document or a phonograph record or a photograph) providing permanent evidence of or information about past events
EXAMPLE SENTENCE:
All cash received from sales and from all other sources has to be carefully identified and recorded.
11. disbursement
the act of spending or disbursing money
EXAMPLE SENTENCE:
Disbursements incurred in the month will also be included on the bill.
12. signature
your name written in your own handwriting
EXAMPLE SENTENCE:
The accounting department prepares all these cheques for the signatures of the business officers who are authorized to sign cheques.
13. procurement
the act of getting possession of something
EXAMPLE SENTENCE:
Procurement software is business software that automates purchasing.
14. inventory
a detailed list of all the items in stock
EXAMPLE SENTENCE:
Accountants usually are responsible for keeping track of all purchase orders that have been placed for inventory (products to be sold by the business) and all other assets and services that the business buys.
15. assets
anything of material value or usefulness that is owned by a person or company
EXAMPLE SENTENCE:
Elementary accounting is all about assets and liabilities.
16. liability
the state of being legally obliged and responsible
EXAMPLE SENTENCE:
This area of responsibility includes keeping files on all liabilities that arise from purchases on credit so that cash payments are processed on time.
17. depreciation
a decrease in price or value
EXAMPLE SENTENCE:
Except for relatively small-cost items, a business maintains detailed records of its property, both for controlling the use of the assets and for determining the appropriate amount of depreciation for accounting and tax calculations.
18. source
the place where something begins, where it springs into being
EXAMPLE SENTENCE:
All cash received from sales and from all other sources has to be carefully identified and recorded, not only in the cash account but also in the appropriate account for the source of the cash received.
19. balance
harmonious arrangement or relation of parts or elements within a whole (as in a design)
EXAMPLE SENTENCE:
Accountants balance the business’s chequebook and control access to incoming cash receipts.
20. processed
subjected to a special process or treatment
EXAMPLE SENTENCE:
This area of responsibility includes keeping files on all liabilities that arise from purchases on credit so that cash payments are processed on time.
III. Exercise: Match the Definitions
Use: assets, inventory, retail, signature & withhold
1. ________________: a detailed list of all the items in stock
(inventory)
2. ________________: the selling of goods to consumers; usually in
small quantities and not for resale
(retail)
3. ________________: hold back; refuse to hand over or share
(withhold)
4. __________________: anything of material value or usefulness that is
owned by a person or company
(assets)
5. ________________: your name written in your own handwriting
(signature)
IV. Exercise: Fill in the Gaps/Blanks
Use the following words: benefits, calculated, deductions,
disbursements, liabilities, pensions, salary & specialize
1. This area of responsibility includes keeping files on all
that arise from purchases on credit so that cash payments are processed
on time.
(liabilities)
2. Many businesses outsource payroll functions to companies or banks that
_____________________ in this area.
(specialize)
3. _______________________________ incurred in the month will also be
included on the bill.
(disbursements)
4. Lower _____________________________ may mean higher tax bills,
which would increase government revenue
(deductions)
5. The total wages and salaries earned by every employee every pay period,
which are called gross wages or gross earnings, have to be
_________________________.
(calculated)
6. Mercedes Benz offered Mr. Hamilton a higher ____________________.
(salary)
7. Retirement, vacation, sick pay, and other _____________________ that
employees earn have to be updated every pay period
(benefits)
8. Until recently, Greek public employees were paid ___________________
that equalled nearly a full salary for life beginning at age 57.
(pensions)
V. Exercise: Match the Picture
Use: chequebook, income tax, office furniture, personnel file & retail store
____________ _____________________
(office furniture)
_______________ ____________
(retail store)
(chequebook)
________________________
(income tax)
____________________
(personnel file)
VI. Listening: What Does an Accountant Do?
Accounting Basics
http://www.ehow.com/video_4987105_accounting-basics.html
(3:15)
What does a chartered accountant do? Andrew Brown
http://www.youtube.com/watch?v=XRRWbdykMVs
(2:33)
VII. Just for Fun
Accounting done easy!
http://www.youtube.com/watch?v=G6vS1edTsV8
(2:15)
The Office Webisodes–The Accountants-#1 The Books Don’t Balance
http://www.youtube.com/watch?v=cexULeQiCjA&feature=related
(2:05)