DEMOCRATIC AND POPULAR REPUBLIC OF ALGERIA

MINISTRY OF HIGHER EDUCATION AND SCIENTIFIC

RESEARCH

MOHAMED BOUDIAF UNIVERSITY - M’SILA FACULTY

OF ECONOMICS, COMMERCE, FINANCE AND MANAGEMENT

SCIENCES

DEPARTMENT OF COMMERCE

PRINT OF LESSONS FOR BUSINESS ENGLISH UNIT

DESIGNED FOR FINAL YEAR OF BACHELOR DEGREE

SPECIALITY: INTERNATIONAL TRADE - FINANCE

PREPARED BY

LECTURER: MAHMOUDI HOUCINE

ACADEMIC YEAR 2017

 Content Page
foreword A
International trade 01
Exercises 03-04
Trade measures 05
Exercises 06-07
Method of Financing trade 08
Exercises 11-12
Export document 13
Exercises 16
Banks 17
Exercises 18
Central banking 19
Exercises 20-21
Commercial banking 22
Exercises 23-24
Personal banking 25
Exercises 26-27
Islamic banking 28
Exercises 30
Accounting 31
Exercises 32
Accounting policy 33
Exercises 34-35
Accounting record 36
Exercises 37-38
Bookkeeping 39
Exercises 42-44
Accounting and auditing 45
Exercises 46-47
The balance sheet 48
exercises 49-50
The balance sheet next 51
Exercises 52-54
Models of letter writing 55
Exercises 58-59
References 60
Summary 61
 These business English lessons have been designed for students of the
faculty of economics, commerce, finance and management sciences in
particular, specialty international trade-finance and accounting.
These courses are planned for students in the second year of bachelor
degree in intention to improve their skills in english and extend their
knowledge in the field of business.
The print comprises a wide range of exercises to master the lessons’
content, it provides fairly activities concerning specific specialties and it is
planned that these have been discussed fully in class, so students are
given the opportunity for working individually or interacting in pairs and
groups to understand and solve different cases (lessons and activities).
As it is known both finance and accounting are treated as a same
discipline and then they have been merged, but by development of
sciences and business in general make many specialties and
approaches appear in different knowledge areas to facing expectations
of business.
These lessons are to provide reinforcement in some aspects of finance
and trade and english language and enable the student to apply this
knowledge to the study of issues in globalization and financing.
The content of the print covers the following axes:
- International trade.
- Banking.
- Accounting.
- Models of letter- writing.

A
 International trade
A. trade
The term trade refers to the sale, transfer or exchange of goods and services
and constitutes the central activity around which the ancillary functions like
Banking, Transportation, Insurance, Packaging, Warehousing and Advertising
cluster. Trade may be classified into two broad categories as follows:
Internal or Domestic Trade: It consists of buying and selling of goods within
the boundaries of a country and the payment for the same is made in national
currency either directly or through the banking system. Internal trade may be
further sub-classified into wholesale trade and retail trade.
International or Foreign Trade: It refers to the exchange of goods and services
between two or more countries. International trade involves the use of foreign
currency (called foreign exchange) ensuring the payment of the price of the
exported goods and services to the domestic exporters in domestic currency,
and for making payment of the price of the imported goods and services to the
foreign exporter in that country’s national currency (foreign exchange).To
facilitate this payment, involving exchange transactions, a highly developed
system of international banking under the overall control and supervision of
the central bank of the concerned country.
International trade is carried on mostly in larger quantities both on
Government account and on private account involving both individuals and
business houses.
Auxiliary to Trade or Aids to Trade: there are certain functions such as
banking, transportation, insurance, ware-housing, advertising, etc. which
constitute the main auxiliary functions helping trade-internal and international.
These auxiliary functions have been briefly discussed here under:
• Banking: Banks provide a device through which payments for goods bought
and sold are made thereby facilitating the purchase and sale of goods on credit.
Banks serve the useful economic function of collecting the savings of the
people and business houses and making them available to those who may
profitably use them. Thus, banks may be regarded as traders in money and
credit.
•Transportation: Transport performs the function of carrying goods from
producers to wholesalers, retailers, and finally customers. It provides the
wheels of commerce. It has linked all parts of the world by facilitating
international trade.
•Warehousing: There is generally a time lag between the production and
consumption of goods. This problem can be solved by storing the goods in
warehouse.
Storage creates time utility and removes the hindrance of time in trade. It
performs the useful function of holding the goods for the period they move
from one point to another. Thus, warehousing discharges the function of
storing the goods both for manufacturers and traders for such time till they
decide to move the goods from one point to another.
•Insurance: Insurance provides a cover against the loss of goods in the process
of transit and storage. An insurance company performs a useful service of
compensating for the loss arising from the damage caused to goods through
fire, pilferage, thief, transportation and thus protects the traders form the fear
of loss of goods. It charges insurance premium for the risk covered.
• Advertising: Advertising performs the function of bridging the information
gap about the availability and uses of goods between traders and consumers. In
the absence of advertising, goods would not have been sold to a widely
scattered market and customers would not have come to know about many of
the new products
Protectionism:
Governments, unlike most economists, often want to protect various areas of
the economy. These include agriculture, so that the country is certain to have
food, and other strategic industries that would be necessary if there was a war
and international trade became impossible. Govemments also want to protect
other industries that provide a lot ofjobs.
Many governments impose a tariffs or import taxes on goods from abroad, to
make them more expensive and to encourage people to buy local products
instead. However there are an increasing number of free trade areas, without
any import tariffs, in Europe, Asia, Africa and Americas.
The world Trade organization tries to encourage free trade and reduce
protectionism, restricting imports in order to help local products. According to
The world Trade organization agreement, countries have to offer the same
conditions to all trading partners. The only way a country is allowed to try to
restrict imports is by imposing tariffs. Countries should not use import quotas,
limits to the number of products which can be imported or other restrictive
measures. Various international agreements also forbid dumping, selling goods
abroad at below cost price in order to destroy or weaken competitors or to earn
foreign currency to pay necessary imports.
Activity one:
Complète the following tables
words synonyms
exchange
function
various
impose

words opposites
international
export
weaken
loss
Activity two:
1. Use your own words as possible to explain the meaning of the words below.
Dumping - internal trade - external trade
2. What is meant by trade? What are its types?
3. What are the ancillary functions of a trade?
3.What are the role of The world Trade organization?
Activity three:
Translate the following paragraph into Arabie.
Storage creates time utility and removes the hindrance of time in trade. It
performs the useful function of holding the goods for the period they move
from one point to another. Thus, warehousing discharges the function of
storing the goods both for manufacturers and traders for such time till they
decide to move the goods from one point to another.
 Trade measures
A. Reasons of foreign trade
International trade is the buying and selling of goods and services across
national borders or territories, allowing both the buyer and seller to expand
their markets for goods and services that otherwise may not be made available
to them.
All countries have different assets or strengths in terms of land, labor, capital,
technology and natural resources Hence, most countries usually focus on those
products and services which they possess comparative or absolute advantage
through specialization. However, such specialization may result in excess
production capacity for certain goods and services, but also opportunity cost
for not producing enough of other goods and services.
In briefly, international trade exists for the following reasons:
- There is an uneven distribution of natural resources in different countries.
Therefore, international trade exists to bridge the gap across geographical
boundaries.
- All countries possess diverse strengths and weaknesses in terms of land,
labor, capital and technology. By focusing on industries with comparative
advantage, cost and operations efficiencies are reaped via specialization.
- It provides consumers the opportunity to be exposed to those goods and
services that are not available in their own country.
- It reduces dependency on domestic market by expanding customers’ demand
in other countries.
- It enhances économie growth and contributes significantly to the country’s
Gross Domestic Product.
B. balance of trade
Imports are goods or services bought from a foreign country, however Export
are goods or services sold to a foreign country.
A country that exports more goods than it imports has a positive balance of
trade or a trade surplus. The opposite is a negative balance of trade or a trade
deficit.
C. The balance of payments
The balance of payments (BOP) can be defined as the statistical record of a
country’s international transactions over a certain period of time presented in
the form of double-entry bookkeeping.
The Balance of Payments comprises current account, capital account,
omissions, and change in foreign exchange reserves.
It is useful to examine a country’s BOP for at least two reasons. First, BOP
provides detailed information about the supply and demand of the country’s
currency. Second, BOP data can be used to evaluate the performance of the
country in international economic competition. For example, if a country is
experiencing perennial BOP deficits, it may signal that the country’s industries
lack competitiveness.
Activity one:
1. The term international trade what does it mean?
2. What is the link between the balance trade and balance of payment?
3. Why does the international trade exist?
4. Give the synonym and the opposite of the following words
Expand= different=
Usually= error=
International^ reduce^
More^ double^
Activity two:
This table gives to you informations about import and export
of country X .(numbers in 104€)

I m p o r t .G 80 90 95

E x p o r t .G 230 65 135

years 2007 2009 2011

1. What is the result of the balance of trade for the country X in 2007
2. Draw the graph which shows the evolution of the balance of trade for
this country.
Activity three:
The graph shows the evolution of the balance of trade for this country.
1. What is the result of the balance of trade for the country in 2009.

2 . Complete the following table

years 2007 2009 2011

I m p o r t .G

E x p o r t .G

2007 2009 2011

 Method of financing trade
A. Documentary crédits
A company which sells goods or services to other countries is known as an

exporter. A company which buys products from other countries is called an

importer. Payment for imported products is usually by documentary credit,

also called a letter o f credit.

This is a written promise by a bank to pay a certain amount to the seller, within

fixed period, when the bank receives instructions from the buyer.

Documentary credits have a standard form, they generally contain:

- A short description o f the good.

- A list o f shipping documents required to obtain payment.

- A final shipping date.

- Expiration date for presenting the document to the bank.

Documentary credits are usually irrevocable, meaning that they cannot be

changed unless all the parties involved agree. Irrevocable credits guarantee

that the bank which establishes the letter o f credit w ill pay the seller i f the

documents are presented within the agreed time.

1. Advantages to the Buyer

- The buyer’ s creditworthiness is enhanced with a bank w illin g to issue a

documentary credit for his account.

- Payment is only made by the bank upon the seller’ s fulfiüment o f the

terms and conditions o f the credit.

- It helps to facilitate downstream import financing services.

2. Advantages to the Seller

- The bank acts as a trusted third party to guarantee payment i f the seller

can fu lfill the terms and conditions o f the credit.

- Title o f the goods is retained by the seller or bank until payment or

acceptance o f documents by the buyer.

 -Documentary crédit operations are guided by recognized international rules
and practices.
-It facilitates pre or post shipment financing related to the documentary
credit.
B. Bill of exchange
Another method of payment is a bill of exchange or draft. This is a payment
demand, written or drawn up by an exporter, instructing an importer to pay a
specific sum of money at a future date. When the bill matures, the importer
pays the money to its bank, Which transfers the money to the exporter’s bank.
This bank then pays the money to the exporter after deducting its charges.
A bank may agree to endorse or accept a bill of exchange before it matures. To
endorse a bill is to guarantee to pay it if the buyer of goods does not. If a bill is
endorsed by a well known bank, the exporter can sell it at a discount in the
financial markets. The discount represents the interest the buyer of the bill
could have earned between the date of purchase and the bill’s maturity date.
When the bill matures, the buyer receives the full amount. This way the
exporter gets most of the money immediately, and doesn’t have to wait for the
buyer to pay the bill.
1. Advantages to the Buyer
- Payment may be deferred until the arrival of goods or even later if delayed
payment arrangements have been made between the buyer and seller.
- Documentary collection is relatively cheaper than documentary credit.
- The buyer may have the opportunity to inspect the documents prior to
making payment.
2. Advantages to the Seller
- Documentary collection is generally uncomplicated and inexpensive
compared to a documentary credit.
- The seller may arrange the title documents to be released to the buyer only
upon his payment or acceptance of draft.
- In the event of non-payment or non-acceptance, the appointed Collecting
Bank, if properly authorized, may arrange for releasing or warehousing of
goods, insurance or even reshipment to the seller.
- It facilitates pre or post shipment financing related to the documentary
collection
C. Open Account:
An arrangement between the buyer and seller whereby the goods are
manufactured and delivered before payment is made. This is the most
advantageous to the buyer in cash flow and cost terms, but it posts the highest
risk for the seller.
1. Advantages to the Buyer
- The buyer pays for the goods or services only when they are received and/or
inspected.
- Unlike advance payment, the buyer’s working capital is not tied up.
- Payment is subject to political, legal or economic situations in the buyer’s
country.
2. Advantages to the Seller
- It enhances the seller’s competitiveness in the global market.
- It helps to establish and maintain long-term trade relationship with the buyer.
D. Advance Payment
An Advance Payment is the whole or part of a contractually due sum that is
paid by the buyer in advance prior to shipment of goods or provision of
services. Advance payment is expensive and contains certain degrees of
performance risk to the buyer.
However, it is not uncommon when the manufacturing process or services
delivered are specialized or capital intensive. In such circumstances, the parties
may agree to fund the deal by partial advance or progressive payments.
1. Advantages to the Buyer
- The buyer may be able to negotiate for a discount in priées in lieu of advance
payment.
2. Advantages to the Seller
- The seller can have immediate use of funds.
- The risk of non-payment is eliminated.
3. Advance Payment is commonly used when:
- The buyer’s creditworthmess is doubtful.
- There is unstable political or économie environment in the buyer’s country.
- There is a potential delay in receiving funds from the buyer due to events
beyond the buyer’s control.
Activity one:
1. Supply the synonym of the following words:
* fixed= * license=
*draft= * order=
2. give the opposite to the following words:
*after ^ *importer^
* Buyer ^ *arrangemenU
3. Use your own words to Cite two advantages of open account concerning the
seller.
4. In which conditions we resort to advance payment?
Activity two:
Evaluate the following statements with true or false
Letter of credit is only valid for certain period of time.
With a letter of credit, the buyer tells the bank when to pay the seller.
An exporter usually has the right to change a letter of credit.
The bill of lading confirms that the goods have been delivered to the buyer.
With a bill of exchange are sold at less than 100% but redeemed at 100% at
maturity.
Activity three:
Put in order the following sentences:
A bank accepts or endorses the bill of exchange.
The exporter sells the bill of exchange at a discount on the money market
The seller or exporter writes bill of exchange and sends it to the buyer or
importer.
The importer’s bank transfers the money to the accepting bank.
The importer receives the goods and pays its bank
Activity four:
What are the bodies (elements) of documentary credit?
In which circumstances the advance payment is used?
Cite two advantages and drawbacks of advance payment for the seller.
 Export documents
Export documents are more complex than those used for domestic sales due to
the special characteristics of international trade, geographical distance,
different customs laws, different means of transport, greater risks, etc. The
documents required for each shipment will depend on the conditions of sale
(Incoterms) agreed between seller and buyer. Here are the majority of Export
documents:
A. International purchase order
Usually, international transactions are based on the buyer's Purchase Order.
Issuance of an international purchase order is normally preceded by an
exchange of information between exporter and importer with respect to the
price, quality and quantity of products, etc.
When the transaction details have been agreed, the seller may issue an
informal price quote or a more detailed invoice. If the buyer accepts the
seller's price and other conditions, the buyer issues a purchase order.
The International Purchase Order may constitute a binding offer or a binding
acceptance, depending on the circumstances. Usually in international
transactions involving a large commercial buyer, the purchase order is often
the main contract form and constitutes the first legally binding offer. In such
cases, the seller's signature of the purchase order will constitute the acceptance
of the transaction.
B. International Commercial Invoice
The International Commercial Invoice is main document of export
documentation because contains all the information about the international
sale. The item, quantity, price for the products or services sold, delivery and
payment conditions, as well as the taxes and other expenses that might be
included in the sale are detailed in an International Commercial Invoice. The
importer, with the original of the International Commercial Invoice declares to
the tax authority of his country the amount that it must pay, to who it is going
to pay and the agreed means of payment. For the exporter, this document
means a documentary evidence of the sales that it has made in foreign markets.
In operations with third countries, the International Commercial Invoice is part
of the customs declaration, upon which, the taxes and tariff rights applied,
must be paid at the moment at which the products enter the country. In
operations with european countries, this document is used as a declaration of
the transaction and tax exemption to comply with the basic tax settlement
conditions. This document is prepared by the exporter and addressed to the
importer and the import customs clearance.
C. BILL OF LADING
A Bill of Lading (B/L) is a document issued by the agent of a carrier to a
shipper, signed by the captain, agent, or owner of a vessel, furnishing written
evidence regarding receipt of the goods, the conditions on which transportation
is made (contract of carriage), and the engagement to deliver goods at the
prescribed port of destination to the lawful holder of the bill of lading.
A Bill of Lading is, therefore, both a receipt for merchandise and a contract to
deliver it as freight. There are a number of different types of bills of lading and
a number of regulations that relate to them as a group of documents shipping
company trough the agent, and the importer.
D. Multimodal Bill of Lading
A Multimodal Bill of Lading MBL is an international transport document
covering two or more modes of transport, such as shipping by road and by sea.
It is also used as a carriage contract and receipt that the goods have been
received.
When it is issued "to the order", the Multimodal Bill of Lading is title of
ownership of the goods and can therefore be negotiated. As a rule, Multimodal
Bills of Lading are not negotiable documents.
E. CERTIFICATE OF ORIGIN
The Certifïcate of Origin certifies the country in which the goods originated or
in which the preponderance of manufacturing or value was added. It also
constitutes a declaration by the exporter. Virtually every country in the world
considers the origin of imported goods when determining what duty will be
assessed on the goods. Nevertheless the exporter's own certification on
company letterhead will suffice.
The origin does not refer to the country where the goods were shipped from
but to the country where they were made. In the event the products were
manufactured in two or more countries, origin is obtained in the country where
the last substantial economically justified working or processing is carried out.
An often used practice is that if more than half of the cost of producing the
goods originates from one country, the "national content" is more than half,
then, that country is acceptable as the country of origin.
In most countries, Chambers of Commerce is the key agent in the delivery of
certificates or origin. However, in some countries, this privilege may also be
extended to other entities such as ministries or customs authorities.
F. Inspection Certificate
The Inspection Certificate for pre shipment inspection is a document issued
by an authority indicating that goods have been inspected (typically
according to a set of industry, customer, government, or carrier
specifications) prior to shipment and the results of the inspection.
Inspection certificates are generally obtained from neutral testing
organizations (e.g, a government entity or independent service company). In
some cases the Inspection Certificate can come from the manufacturer or
shipper, but not from the forwarder or logistics firm.
Activity one:
1. Attach words with their synonyms using arrows
words synonyms
issue almost
virtually emit
regulations restrictions
2. Attach words with their opposites using arrows
words opposites
international whole
detailed buyer
seller local
Activity two:
1. Why are Export documents more complex? explain
2. International transactions what is used for?
3. Who prepare International Commercial invoice?
4. To whom the International Commercial invoice is addressed?
5. Who is the responsible to deliver the certificate of origin?
Activity three:
Complete the table with suitable words.
verb Noun Adjective
agreement -
- clear
- lawful
trade -
economize
acceptance
 Banks
A. Functions of Banks
the most important and best-known financial institution for people is the
commercial bank, which is involved in trade, and what it trades in is mo-
ney and other financial services. It carries out this trade for a profit, just as
any business does.
Banks carryout a variety of functions for its customers they operates sav-
ings and checking accounts, they offers loans and change money.
With the familiar savings account, the customer can save money and
earn interest.
The customer deposits and withdraws money, and his deposits and Withdra-
wals along with his interest earnings and the balance (the total of Deposits
minus withdrawals) are recorded in a passbook.
A checking account is a service that usually makes our lives a little easier.
The bank holds our money and we pay our bills with our checks by Drawing
on our accounts.The checks come back to our bank through a clearinghouse
and our accounts are charged for the checks we have written.
At the end of each month we receive a statement which Summarizes
our transactions. Although checking accounts are very helpful,we can someti-
mes make problems for ourselves by bouncing a check.
The check bounces back to us like a ball (a check that bounces is called a
rubber check).It is marked insufficient funds,meaning we do not have
enough money in our account to cover the check, we have overdrawn our
account.
Banks usually have a service charge for maintaining our checking
accounts, although some banks do not charge us if we keep a minimum bala­
nce in our account. So for example, if the minimum is 800$ and our balance
never goes below 800$, we do not pay a service charge.
In addition to operating accounts, banks also loan money and charge Interest
on the loans. Although banks always try to keep a certain amount of money in
reserve to cover withdrawals, they invest a large part of the money they are
holding to earn more money. They also offer other services for a fee, such as
storing valuables for people in safe deposit boxes inside the bank’s vault cha-
nging currencies, and selling traveller’s checks.
In short, banks provide services and use our money to make money.
Activity one:
Answer the following questions.
1. What does a bank trade in?
2. What are the functions of the bank in brief?
3. What operations with money does a customer perform in a bank?
4. What does the word “balance” mean in the language of banks?
6. What operations does a bank perform with money?
Activity two:
Complète the table with suitable words

Verb Noun Adjective

/ Money

withdraw /

invest /

deposit /

/ profit

record /

finance
 Central banking
A. The functions of central banks
Most countries have a central bank that provides financial services to the
govemment and to the banking System. If a group of countries have a common
currency, for example the euro, they also share a central bank, such as the
European Central Bank in Frankfurt.
Some central banks are responsible for monetary policy, trying to control
the rate of inflation to maintain financial stability. This involves changing
interest rates, the aim is protest the value of the currency, what it will purchase
at home and in other currencies.
In many countries, the central bank supervises and regulates the banking
system and the whole financial sector. It also collects financial data and
publishes statistics, and provides financial information for consumers. In most
countries, the central bank prints and issues currency, putting banknotes into
circulation. It also participates in clearing cheques and settling debts among
commercial banks.
B. The central bank and the commercial banks
Commercial banks have to keep reserves, a certain amount of their deposits,
for customers who want to withdraw their money. These are held by the central
bank, which can also change the reserve-asset ratio, the minimum percentage
of its deposits a bank has to keep in les reserves.
If one bank goes bankrupt, if can quickly affect the stability of the whole
financial System. And if depositors think a bank is unsafe they might all try to
withdraw their money. If this happens it’s called a bank run or a ru n on the
bank and the bank will quickly use up its reserves. Central banks can act as
lender of last resort, which means lending money to financial institutions in
difficulty, to allow them to make payments. But central banks don’t always
bail out or rescue banks in difficult, because this could lead banks to take risks
that are too big.
C. Central banks and exchange rates
Central banks manage a country’s reserves of gold and foreign currencies.
They can try to have an influence on the exchange rate, the price at which their
currency can be converted into other currencies. They do this by intervening
on the currency markets, and moving the rate up or down by buying or selling
their currency. This changes the balance of supply, how much is being sold
and demand, how much is being bought.
Activity one:
Attach the two divisions of the sentences
1. The central bank will sometimes lend money
2. Banks would probably start raking too many risks
3. Central banks are usually responsible for
4. The central Bank can alter
5. There will be low and stable inflation
A. if they could always be sure of rescue by the central bank.
B. if there is a run on a commercial bank.
C. if monetary police is successful.
D. printing and distributing banknotes.
E. the amount of money commercial Banks are able to lend.
Activity two:
Complete the text using words in the box.
Stability monetary fmancial supervising
Today the Federal Reserve's duties fall into four general areas:
1. conducting the nation's.........................................policy;
2. ............and regulating banking institutions and protecting the credit
rights of consumers;
3. maintaining th e ..............................of the fmancial system; and
4. Providing certain........................................services to the US government,
the public, fmancial institutions, and foreign official institutions.
Activity three:
Use the word combinations below to complète the sentences below
Bank run Currency markets
Exchange rate Financial stability
Monetary policy Financial System
1............... including setting interest rates, is designed to maintain.....................
2. if there’s a .................................... and the bank goes bankrupt, this can
have a rapid effect on the whole.....................
3.On one day in 1992, the Bank of England lost over £1 billion (more than half
of the country’s foreign reserves) in the trying to protect th e ...............of the
pound.
 A. Bank's activities

When people have more money than they need to spend, they may choose to

save it. They deposit it in a bank account, at commercial or retail banks, and

bank generally pays interest to the depositors. The bank then uses the money

that has been deposited to grant loans, lend money to borrowers who need

more money than they have available .banks make a profit by charging a

higher rate of interest to borrowers than they pay to depositors.

Commercial banks can also move or transfer money from one customer's

bank account to another one at the same or another bank, when the

customer asks them to.

B. crédit

Banks also create, make money available for someone to borrow because the

money they lend from their deposits is usually spent and so transferred to

another bank account.

The capital a bank has and the loans it has made are its assets .the customers'

deposits are liabilities because the money is owed to someone else. Banks

have to keep a certain percentage of their assets as reserves for borrowers

who want to withdraw their money.

This is known as the reserve requirement, for example if the reserve

requirement is 10%, a bank that receive a100dollar deposit can lend 90 dollar

of it . If the borrower spends the money and writes a cheque to someone who

deposits of the 90 dollar, the bank receiving that deposit can lend 81 dollar.

As the process continues, the banking system can expand the first deposit of

100 dollar into nearly 1.000in this way it creates credit of almost 900 dollar.

B. loans and risks

Before lending money, a bank has to assess or calculate the risk involved

generally, the greater the risk for the bank of not being repaid the higher the

interest rate they charge.

Most retail banks have standardized products for personal customers such as

personal loans .this means that all customers who have been granted a loan

have the same terms and conditions, they have the same rules for paying

back the money.

Banks have more complicated risk assessment methods for corporate

customers business clients, but large companies these days prefer to raise

their own finance rather than borrow from banks.

Banks have to find a balance between liquidity, having cash available when

depositors want it and different maturities, dates when loans will be repaid.

They also have to balance yield, how much money a loan pays and risk.

Activity one: With referring to words in the box, complète the sentences

below Charge withdraw assess

1. with standardized products, all customers are............ the same interest

rate

2. banks generally know from experience how much cash to keep in their

reserves for customers who w a n t.............it

Banks carefully study the financial situation of company t o ...........the risk

involved in lending it money.

Activity two: Attach two parts to get useful sentences:

1. banks lend savers' deposit

2. they also create credit by

3. how much credit banks can create

4. before lending money

5. The interest rate on loan

6. banks always need liquidity

a. banks have to assess the risk involved

b. depends on reserve requirement

c. depends on how risks it is for the bank to lend the money

d. so they can't lend all their money in loans with long maturities

e. lending the same original deposit several time

f. to people who need to borrow money

Activity three:

1. Complète the table

Verb Noun of actor

consume

deposit

borrow

lend

save

2. Translate the following paragraph into Arabie

Commercial Banks normally provide short-term finance which is repayable

within a year, they provide advance to their customers with or without

securities. It is one of the most common and widely used short-term sources

of finance, which are needed to meet the working capital requirement of the

company.

It is a cheap source of finance, which is in the form of pledge, mortgage, and

hypothecation and bills discounted.

A .current accounts

A current account is an account which allows customers to take out or

withdraw money, with no restriction. money in the account does not usually

earn a high rate of interest, the bank does not pay much for borrowing your

money, however many people also have a saving account or deposit account

which pays more interest, monthly banks send statements listing recent sums

of money going out, called debits and sums of money coming in called credits.

Nearly all customers have a debit card allowing them to make withdrawals

and other transaction at cash dispensers most customers have a credit card

which can be used for buying goods and services as well as for borrowing

money. In some countries, people pay bills with cheques, in other countries,

banks don't issue chequebooks and people pay bills by bank transfer. These

include standing orders which are used to pay regular fixed sums of money,

and debits, which are used when the amounts and payment date varies.

B. banking products and services

Commercial banks offer loans, fixed sums of money that are for fixed period

(e.g two years).they also offer overdraft, which allow customers to overdraw

on, they can have a debt up to an agreed limit, on which interest is calculated

daily, this is cheaper than a loan if for example you only need to overdraw for

a short period. Banks also offer mortgages to people who want to buy a place

to live. These are long-term loans on which the property acts as collateral or a

guarantee for the bank. If the borrower doesn't repay the bank can repossess

the house or flat, the bank takes it back from the buyer, and sells it.

Banks exchange foreign currency for people going abroad, and sell traveller's

cheques which are prorected against loss or theft. They also offer advice

about investment and private pension plans, saving money for when you
retire from work. Increasingly banks also try to sell insurance products to their

customers.

C. E-banking

In the nineties, many commercial banks thought the future would be in

telephone banking and internet banking or e-banking but they discovered

that must of their customers preferred to go to branches, local offices of the

bank, especially ones that had longer opening hours and which were

conveniently situated in shopping centres.

Activity one:

Complete the advertisement with words from the box.

Credit card current account debits card

Direct debit statements foreign currency

Saving accounts standing order traveller's cheques

Announcement:

Abc bank now offers 19% interest o n ...........and 2.5% o n ............ we will give

you a cheque book and plastic a t r e e ........ for use in cash dispensers .and the

possibility to apply for a................. you can pay fixed monthly bills

by........ and other bills by............... there are no account charges as long as

you remain in credit , and we send you free m on th ly...........we can also sell

you......... For you next Holiday o r .........for greater security.

Activity two:

* Cite words in the text with the following meaning.

1. What you can earn when you leave your money in the bank.

2. An amount of money borrowed from a bank for a certain length of time,

usually for a specific purpose.

3. Something that acts as a security or a guarantee for a debt.

4. An arrangement to withdraw more money from a bank account than you

have placed in it.

5. a long -term loan to buy somewhere to live.

6. an arrangement for saving money to give you an income when you stop

working.

7. to take back property that has not been completely paid for.

* translate the following paragraph into Arabic.

Banks carry out a variety of functions, the major one is depositing and

withdrawing Money by Customers,or most of us the most important and best-

known financial institution is the commercial bank, which is involved in

trade, and what it trades in is money and other financial services, it

carries out this trade for a profit, just as any business does.
A. Interest-free banking
Some financial institutions do not charge interest on loans or pay interest on
savings, because it is against certain ethical or religious beliefs. For example,
in Islamic countries and major financial centers there are Islamic banks that
offer interest-free banking.
Islamic banks do not pay interest to depositors or charge interest on
borrowers. Instead they invest in companies and share the profits with their
depositors. Investment financing and trade financing are done on a profit and
loss sharing (PI.S) basis. Consequently the banks, their depositors, and their
borrowers also; share the risks of the business. This form of financing is
similar to that of venture capitalists or risk capitalists who buy the shares of
new companies.
B. Types of accounts
Current accounts in Islamic banks give no return, pay no interest to
depositors. They are a safekeeping arrangement between the depositors and the
bank, which allows the depositors to withdraw their money at any time, and
permits the bank to use this money. Islamic banks do not usually grant
overdrafts on current accounts, Savings accounts can pay a return to
depositors, depending on the bank’s profitability, that is its ability to eam a
profit. Therefore the around of return depends on how much profit the bank
makes in a given period. However, these payments are not guaranteed. There is
no fixed rate of return, the amount of money the investment pays, expressed as
a percentage of the amount invested, is not fixed. Banks are careful to invest
money from savings accounts in relatively risk-free, short-term projects.
Investment accounts are fixed-term deposits which cannot be withdrawn
before maturity. They receive a share of the bank’s profits. In theory, the rate
of return could be negative, if the bank makes a loss. In other words, the
capital is not guaranteed.
C. Leasing and short-term loans
To finance the purchase of expensive consumer goods for personal
consumption, Islamic banks can buy an item for a customer, and the customer
repays the bank at a higher price later on. Or the bank can buy an item for a
customer with a leasing or hire purchase arrangement. Another possibility is
for the bank to lend money without interest but to cover its expenses with a
service charge.
If a business suddenly needs very short-term capital or working capital for
unexpected purchases and expenses, it can be difficult to get it under the PLS
system. On the other hand, PLS means that bank-customer relations are very
close, and that banks have to be very careful in evaluating projects, as they are
buying shares in the company.
D. Characteristics of Islamic banks and Convention Banks
Islamic banks
• Give no return on current accounts; share profits with holders of savings
accounts and investment accounts.
• Share borrowers’ profits or losses.
• Buy items for personal customers with a leasing or hire-purchase
arrangement.
Convention Banks
• Pay interest to depositors.
• Charge interest to borrowers.
• Lend money to finance personal consumption goods.
Activity one:
Match the beginning of the sentences with ending to get useful one.
1. Instead of charging and paying interest.
2. Depositors in Islamic banks.
3. The basic feature of Islamic banks.
4. Businesses that borrow from Islamic banks.
5. Islamic banks operate in a similar way.
a. do not receive a fixed return.
b. have to share their profits with the bank.
c. Islamic banks and their customers share profits and losses,
d. is that it is interest-free.
e. to venture capitalists who buy companies’ stocks or shares.
Activity two:
Exploit the combinations to complete the sentences below.
Investment account working capital
service charge risk capitalist
1. All businesses need.......................................... for everyday purchases and
expenses.
2. I don’t pay interest but the bank adds a .................................... to cover its
expenses.
3. Islamic banks are like th e...............................who buy the shares of new
companies.
The bank pays me some of its profits on the money I have in my..........
 Accounting
Accounting is frequently called the “language of business” because of its Ability
to communicate financial information about an organisation.
Managers, potential investors, creditors,and the government depend on acompanys
accounting system to help them make informed financial decisions.
An effective accounting system must include accurate collecting,recording, sum-
marizing, interpreting, and reporting of information on the financial status of
an organization. Incoming money(revenues) and outgoing money ( expendit-
ures) must be carefully monitored and all transactions summarized in
financial statements,which reflect the major financial activities of a company
Two common financial statements are:the balance sheet, which shows the
position of a company at one point in time(for example:March 7,1997), and
the income statement, which shows the financial performance of a company
over a period of time (for example the end of this financial year).
The balance sheet provides a summary of what a company owns and what
It owes on one particular day.
Assets in the balance sheet represent everything that is owned by a business, And
are divided into fixed assets and current assets.
Cash and accounts receivable are all current assets, but property makes up
the fixed assets.
Liabilities are the debts owed by a company for example to suppliers and
banks.
The liabilities section of the balance sheet is often divided into current and
long- term liabilities.
Current liabilities are accounts and income taxes payable but long-term
liabilities are bonds and long-term notes.
If liabilities are subtracted from assets (assets - liabilities),the amount
remaining is known as owner’s equity.This relationship of assets, liabilities
and owner’s equity is often represented by the fondamental accounting
équation:
assets = liabilities + owner’s equity

People who specialize in the field of accounting are known as

accountants
Activity one:

*. Explain the meaning of the following terms:

liabilities, assets, equities.
*. Answer the following questions.
1. Why is accounting called the language of business?
2. What does effective accounting system include?
3. What are the common financial statements?
5. What do assets represent in a balance sheet?
6. What does the term fixed assets and current assets mean?
7. In what relationships are assets, liabilities and owner’s equity?
Activity two:
Complète the following tables
words synonyms
communicate
summarize
activity

words opposites
Fundamental
subtract
loss
 Accounting policies
A- Valuation and measurement
Investors in companies want to know how much the companies are worth,
so companies regularly have to publish the value of their assets and liabilities.
Companies also have to calculate their profits or losses, their managers need
this information, and so do shareholders, bondholders and the tax authorities.
Companies can choose their accounting policies, their way of doing their
accounts. There are a range of methods of valuation, deciding how much
something is worth, and measurement determining how big something is, that
are accepted by law or by official accounting standards. In the USA, there is
Generally Accepted Accounting Principles (GAAP). In most of the rest of the
world there are International Financial Reporting Standards (IFRS), set by the
International Accounting Standards Board. These are technical rules or
conventions, accepted ways of doing things that are not written down in a law.
Although businesses can choose among different accounting policies,
they have to be consistent, which means using the same methods every year,
unless there is a good reason to change a policy, this is known as the
consistency principle. The policies also have to be disclosed or revealed to the
shareholders, the Annual Report will contain a statement of accounting policies
that mentions any changes that have been made. This enables shareholders to
compare profits and values with those of previous years.
Areas in which the choice of policies can make a big difference to the
final profit figure include depreciation, reducing the value of assets in the
company's accounts, the valuation of stock or inventory, and the making of
provisions, amounts of money deducted from profits, for future pension
payments.
As there is always more than one way of presenting accounts, the
accounts of British companies have to give a true and fair view of their
financial situation, meaning there are various possibilities, rather than the true
and fair view, meaning only one is possible.
B. Historical cost and inflation accounting
The aim of accounting standards is to provide shareholders with the
information that will allow them to make financial decisions. This is one
reason why in many countries accounting follows the historical cost principle;
companies record the original purchase price of assets, and not their
(estimated) current selling price or replacement cost. This is more objective,
and the current value is not important if the business is a going concern, a
successful company that will continue to do business, as its assets are not
going to be sold, or do not currently need to be replaced.
However, some countries with regular high inflation, eg. in South
America, use inflation accounting systems that take account of changing
prices. One system used is replacement cost accounting, which values all
assets at their current replacement cost, the amount that would have to be paid
to replace them now.
Activity one:
Are the following statements true or false? In the text, find reasons for your
answers.
1. Companies are told which accounting policies to use.
2. Companies can change their accounting policies whenever they like, as long
as they disclose this in their annual report.
3. Companies could produce several profit figures, depending on how they
depreciated their assets, valued their inventory, etc.
4. There is only one correct interpretation of a company's financial position,
and company’s accounts must show this.
5.In a lot of countries, companies do not record the current value of their
assets.
6.In countries with high inflation, companies value their assets at their current
replacement cost.
Activity two:
Match the two parts of the sentences to get useful one.
1. Companies’ managers, investors, creditors and the tax authorities all
2. There are different ways of doing accounting but companies have to be
consistent
3. Companies have to disclose or make known
4. The historical cost principle is that the price paid to buy assets
5. A going concern usually doesn't.
a. and not their current value, is recorded in accounts.
b. need to know the current market value of its assets
c. need to know about the size of profits or losses
d. which accounting methods they are using
e. which means regularly using the same methods.
Activity three:
Complete the table with words from the text by related forms.
verb Noun Adjective
Calculation -
- Consistent
- Conventional
measure -
Present -
valuable
 Accounting record
A. Double-entry record
Younis works in the accounting department of a trading company, he began his
career as a bookkeeper. Bookkeepers record the company’s daily transactions,
sales, purchases, debts, expenses, and so on. Each type of transaction is
recorded in a separate account, the cash account, the liabilities
Account, and so on. Double-entry bookkeeping is a system that records two
aspects of every transaction. Every transaction is a debit, a deduction in one
account and a corresponding credit, an addition in another. For example, if a
company buys some raw materials, the substances and components used to
make products that it will pay for a month later; it debits its purchases account
and crédits the supplier’s account. If the company sells an item on credit, it
crédits the sales account, and debits the customer’s account. As this means the
level of the company’s stock, goods ready for sale, is reduced, it debits the
stock account. There is a corresponding increase in its debtors, customers who
owe money for goods or services purchased, and the debtors or accounts
payable account is credited. Each account records debits on the left and credits
on the right. If the bookkeepers do their work correctly, the total debits always
equal the total credits.
B. Day books and ledgers
For accounts with a large number of transactions, like purchases and
sales, companies often record the transactions in day books or journals, and
then put a daily or weekly summary in the main double-entry records.
In Britain, they call the main books of account nominal ledgers.
Creditors, suppliers to whom the company owes money for purchases made on
credit are recorded in a bought ledger. They still use these names, even though
these days all the information is on a computer.
C. Balancing the books
At the end of an accounting period, for example a year, bookkeepers
prépare a trial balance which transfers the debit and credit balances of different
accounts onto one page.
As always, the total debits should equal the total credits. The
accountants can then use these balances to prepare the organizations financial
statement.
Activity one:
Complète the following tables
words synonyms
transaction
summary
record

words opposites
equal
purchases
increase
Activity two:
Match the words in the box with the definitions below.
Credit Ledger Debit
Creditors Stock debtors
1. an amount entered on the left-hand side of an account, recording money paid
out.........
2. a book of accounts........
3. customers who owe money for goods or services not yet paid for........
4. an amount entered on the right-hand side of an account, recording a payment
received........
5. goods stored ready for sale.....
6. suppliers who are owed money for purchases not yet paid for......
Activity three:
With referring to the text complète the expressions below.
1........................................... shows where money comes from and where it
goes, it is always transferred from o n e ...........................to another one. Every
event is entered twice, once as a credit and once as a ..........................
2. Most businesses record very frequent or numerous transactions in
................................................or ...........................
3. The main account books are called..................................... , and the book
relating to creditors is called th e .................
4. In order to prepare financial statements, companies do a ..............
.........which copies all the debit and credit balances of different accounts onto
a single page.
Activity three: by using dictionary translate the following paragraph into
English.

<_ûWJl ^2 ■'; (jJ*ss ^JlsJl jSjsJl T JS^û JjJ^.

^ s -îVl <_ûWJIj j ^hjVI <_ûWJl

AjJÜjJl dJ^jll ~j* j l ^»AÜù j l ^jîb

 bookkeeping

Bookkeeping is an essential accounting tool, A small business or company

may employ only one bookkeeper, who records all of the financial data by
hand; large organizations may employ many bookkeepers, who use electronic
and mechanical equipment for a large part of their work. Each organization
has its own bookkeeping requirements but all systems operate on the same
basic principles. The bookkeepers themselves must be accurate, good in
math, and meticulous, that is, they must be very careful to record each detail
in its proper place .
About 3.000 BC the Sumerians, the Egyptians, and other peoples of the
Middle East developed the first known business records. The results of tax
collections, farming harvests and the transactions of merchants were
recorded by means of written numbers. The Romans too, were prolific
keepers of records. Indeed, Roman numerals were used in many parts of
Europe until the fifteenth century AD. The Stimulus for modem bookkeeping
came with the introduction of Arabic, or hindu- Arabic, numerals and decimal
system, in the twelfth century AD. Most people today use Arabic numerals .
The two basic systems of bookkeeping are double entry and single entry.
The double-envy method was perfected by the merchants of Venice during
the fifteenth century and is still used today the basic principle of double-entry
bookkeeping is that every transaction has two fold effect by other words a
value is received and a value is yielded or parted with. Both effects which are
equal in amount must be entered completely in the bookkeeping records.
An account is a record of the financial transactions that concern one item or a
group of similar items. The account includes categories of financial data for
each area of interest during a specific period, the value at the beginning of a
period changes in value during the same period, and the value at the end of a
period. The broad areas of interest can be labeled assets liabilities, and net
worth Income and expense accounts are totaled at regular intervals, and the
resulting profit or loss is posted to a capital account.

Anything of value that a business or organization owns is commonly

known as an asset. Asset accounts include cash, which is the money on hand
or in the bank furniture and fixtures, accounts receivable, the claims against
customers that owe money, stock or inventory, office supplies, and, many
others that show what the organization owns.
Debts owed to creditors are known as liabilities. If money is owed to an
organization or person for things or services purchased on credit, this liability
is called an account payable. Other liabilities include wages or salaries that
are owed to employees, or taxes that have not yet been paid.
The value of the business to the owner or owners is known as capital.
Other terms used to designate capital are proprietorship, owners' equity
(usually abbreviated OE), ownership, or net worth.

A separate account is kept for each asset, liability, and capital item so
that information can be recorded for each of them. Accounts are also
maintained for income and for expenses, and like assets, liabilities, or capital,
these accounts are also entered in the ledger, which is a detailed listing of all
the accounts of an organization. Entries from all the journals are transferred
to the ledger at regular intervals. This process called posting is usually done
monthly.

Journals, or books of original entry, are designed to record information

about different transactions, including sales, purchases, cash receipts, cash
disbursements, and many others. Journals have two or more columns to
record increases or decreases in the accounts affected by the transaction, and

they often have space for a date and an explanation of the transaction.

All transactions affect at least two accounts. Each transaction must be

analyzed to determine which accounts are affected, and whether they should

be increased or decreased. An entry made on the left-hand side or column of

an account is called a debit, while an entry made on the right-hand side or

column is a credit. Debit, usually abbreviated DR, at one time meant value

received, or literally he owes. Credit, usually abbreviated CR, meant value

parted with, or literally he trusts. In modern bookkeeping, debit refers only to

the left-hand side of an account, whereas credit refers to the right-hand side.

Some bookkeepers use a far right-hand column to keep an up-to-date

balance of the account.

From the basic accounting formula, that is, assets=liabilities + owners'

equity (or capital), certain guidelines have evolved through general

agreement and custom. asset accounts are increased by debiting that is, on

the left side, and they are decreased by crediting, that is, on the right side. the

opposite is true for liability and proprietorship accounts, which are increased

on the credit side and decreased on the debit side.

Income and expense accounts represent changes in equity income

increases proprietorship, while expenses decrease proprietorship. income

accounts are increased on the credit side and decreased on the debit side.

while expense accounts increased on the debit side and decreased on the

credit side.

Since every transaction affects at last two accounts, at least two entries

must be made in the journal.

 Regularly and at fixed intervals, usually monthly, the bookkeeper posts

all the entries from each journal to the appropriate account in the general

ledger. The bookkeeper then foots, or totals the columns of each account,

that is, he or she records the amounts of the debits and credits and records

the balance of each account. Since debits are always recorded in amounts

equal to credits the debits and credits should always equal each other. The

test that determines whether the total of debits equals the total of credits is

called a trial balance. If the accounts are not balanced, some error has been

made which the bookkeeper must find and correct. The financial statements

of a company, like those that will be discussed in other topics help

management to evaluate and direct the operations of an organization.

The second basic system of bookkeeping, as mentioned previously, is

called the single-entry method. This method refers to any system that does

not include the complete results of every transaction. The most common type

of single-entry bookkeeping involves records of cash, accounts receivable, and

accounts payable.

Many bookkeeping systems include journals and records for specific

types of transactions, special purchase books for example, include invoice and

voucher registers. Invoices are itemized statements of merchandise sold to a

customer; they list the quantity and the charges. Vouchers are bills received

for merchandise or services. One important, widely used journal is the cash

disbursement register, which records the details of all checks written, to

whom, when, how much and for what purpose. Another popular journal is the

cash receipts journal in which all payments received are recorded.

Bookkeepers are also responsible for maintaining the records of a

company, including of course, the computation of taxes that are to be

deducted and withheld, and the completion of government forms that are
required for tax and other employment purposes. In a small company, the

bookkeeper may also function as a cashier as an assistant to the manager, or

in any number of clerical jobs. Larger firms have staffs of bookkeepers ranging

from as few as two or three to several hundred. They often use special forms

and high-speed computing and tabulating machines, but basic bookkeeping

rules are the same. Regardless of the size of the operation, the bookkeeper is

a key person in the organization's system of financial information.

Activity one:

1. How do bookkeeping procedures in a large organization differ from

those in a small one? Are the basic principles the same or different?

2. What are some of the basic requirements for a bookkeeper?

3. What are the two basic methods of bookkeeping?

4. When was the double-entry method introduced? By whom? What is its

basic principle?

5. What is an account? What are the three categories of financial data

listed in an account?

6. What broad areas of interest is bookkeeping concerned with?

7. What is the difference between an asset and a liability? Give an example

of each one.

8. What kinds of accounts are entered in a ledger?

9. What is posting?

10. What information is recorded in journals?

11.On which side of an account are debits entered? On which sides are

credits entered? What do these terms mean literally? How are they

commonly abbreviated?
 12. What is the basic accounting formula?

13. How are asset and expense accounts decreased? how are they

increased?

14. How are liability, capital, and income accounts decreased? How are

they increased?

15. What is the process by which entries are made in the ledger?

16. What is the purpose of footing, or totaling the columns of an account?

Activity two:

Complete the following sentences using words from the text:

1. The bookkeepers themselves must b e ...good in math. a n d ......

2. The Romans were .... Keepers of records.

3. The two basic systems o f .are double-entry and single-entry.

4.A n Is record of the financial transactions that concern one item or

group of similar items.

5. The broad areas of interest can be lab e led ...and.....

6. Anything of value that a business or organization owns in commonly

known as an . . .

7. An entry made on the left-hand side or column of an account is called....

8. Asset accounts are increased b y ..

9.The bookkeeper th e n or totals, the columns of each account.

10........ are bills received for merchandise or services.

Activity three:

Complete the sentences with one of the following prepositions: about, aside,

off, out, to, up.

l.People were used to seeing Amy set.... at a quarter past mine every

morning.

2.She s e t ......to impress the neighbors with her flower beds and lawn.
 3.We are settin g ...... a branch office in Canada.

4. Mike picked up the telephone and s e t .... calling the police.

5.When the burglar tried to escape, John s e t ....... with his umbrella.

6. When the burglar entered the house, he set...the alarm.

7.The rings were s e t ......in the jewelers window.

8. When the children had gone home after the party, I set .... and cleared

up the mess.

9. Ron has set... some money for his old age.

10. The bright wallpaper sets ... the pale carpet.

Activity four:

1. Give another word or phrase of similar meaning to:

Employ Disbursements record important explanation.

2. Summarize the two basic systems of bookkeeping

3. Translate the first paragraph of the text into Arabic

 Accounting and auditing
A. Accounting
• Accounting involves recording and summarizing an organization’s
transactions or business deals, such as purchases and sales, and reporting
them in the form of financial statements. In many countries, the accounting
or accountancy profession has professional organizations which operate
their own training and examination systems, and make technical and ethical
rules, these relate to accepted ways of doing things.
• Bookkeeping is the day-to-day recording of transactions.
• Financial accounting includes 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.
B. Auditing
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.
An internai audit is carried out by a company’s own accountants or internal
auditors.
An external audit is done by independent auditors, auditors who are not
employees of the company.
The external audit 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.
There is always more than one way of presenting accounts. The accounts
of British companies have to give a true and fair view of their financial
situation. This means that the financial statements must give a correct and
reasonable picture of the company’s current condition.
Activity one:
Match the words in the box with the definitions below
Internal auditor external auditor accountant
bookkeeper management accounting financial accounting

1.1 record all the purchases and sales made by this department.
2.This month, I’m examining the accounts of a large manufacturing company.
3.1 analyze the sales figures from the different departments and make decisions
about our future activities.
4.1 am responsible for preparing our annual balance sheet.
5.When the accounts are complete, I check them before they are presented to
the externat auditors.
Activity two:
Choose the suitable word to complete the following sentence
l.The purpose of an audit is to gather and evaluate evidence in order to
form an opinion on th e ......of a company's financial statements.
(a) rationality (b) realization (c) reliability (d) responsibility
2. The audit...... is usually no more than a page in length and is attached to
the financial statements.
(a) Report (b) response (c) result (d) review
3. Auditors are not responsible for th e ......of the financial statements of a
company.
(a) Evaluation (b) examination (c) position (d) preparation
4. In the financial statements, the company implicitly states that all items,
account balances and transactions a re ......valid, complete and accurate.
(a) essentially (b) generally (c) materially (d) precisely
5. An error in ...... is committed when the financial statements do not
include an item which should be included.
(a) accuracy (b) auditing (c) completeness (d) validity
6. An error in ...... is committed when the financial statements include
incorrect information about an item that should be included.
(a) accuracy (b) auditing (c) completeness (d) validity
7. One of the principal goals of the auditor is to add......to this assertion.
(a) Credentials (b) credibility (c) creditworthiness (d) credulity
8. Audit risk is the risk that the auditor expresses an inappropriate audit
opinion when the financial statements are significantly.......
(a) misstated (b) overstated (c) restated (d) understated
9. In addition to the financial statements, the auditor also examines the
company's internai.......... procedures for effectiveness.
(a) Coherence (b) command (c) control (d) correspondence
A. Assets, liabilities and capital

Company law in Britain, and the Securities and Exchange Commission in

the US, require companies to publish annual balance sheets, statements for
shareholders and creditors. The balance sheet is a document which has two
halves. The totals of both halves are always the same, so they balance. One
half shows a business's assets, which are things owned by the company, such
as factories and machines, etc., that will bring future economic benefits. The
other half shows the company's liabilities, and its capital or shareholders'
equity. Liabilities are obligations to pay other organizations or people, money
that the company owes, or will owe at a future date. These often include
loans, taxes that will soon have to be paid, future pensions payments to
employees, and bills from suppliers, companies which provide raw materials
or parts. If the suppliers have given the buyer a period of time before they
have to pay for the goods, this is known as granting credit. Since assets are
shown as debits (as the cash or capital account was debited to purchase
them), and the total must correspond with the total sum of the credits (that is
the liabilities and capital) assets equal liabilities plus capital (briefly A = L + C).
American and continental European companies usually put assets on
the left and capital and liabilities on the right. In Britain, this was
traditionally the other way round, but now most British companies use a
vertical format, with assets at the top, and liabilities and capital below.
Ex . of Balance Sheet, 31 December, xx example of balance sheet

Fixed assets 7.500 liabilities 8.000

Current assets 5.500 Shareholders' equity 5.000
Total assets 13.000 total liabilities 13.000
B. Shareholders' equity

Shareholders' equity consists of all the money belonging to

shareholders. Part of this is share capital, the money the company raised by
selling its shares. But shareholders' equity also includes retained earnings,
profits from previous years that have not been distributed (paid out to
shareholders as dividends). Shareholders' equity is the same as the company's
net assets, or assets minus liabilities

A balance sheet does not show much money a company has spent or
received during a year. This information is given in other financial statements
such as the profit and loss account and the cash flow statement.

Activity one:

Attach words with their Descriptions using arrows.

words Descriptions

liabilities are things a company owns and uses in its business

suppliers consist of everything a company owes

Retained Are profits that the company has not distributed to

earnings shareholders.

assets consists of money belonging to a company's owners.

Shareholders' are companies that provide other companies with materials,

equity components, etc
Activity two:

Are the following statements true or false? Find reasons for your

answers.

1. British and American balance sheers shown the same information, but
arranged differently.
2. The revenue of the company in the past year is shown on the balance
sheet.
3. The two sides or halves of a balance sheet always have the same total.
4. The balance sheet gives information on how much money the company
has received from sales of shares.
5. The assets total is always the same as the liabilities total.
6. The balance sheet tells you how much money the company owes
Activity three:

Use words of the expressions in the box to complete the sentences below

-Distribute profits - grant credit - owe money

- pay liabilities - retain earnings

a. We........ a lot of our............ because we don't.........any of our........... to

the Shareholders.

b. Most businesses have customers w ho............... because they...............

them for one or two months.

c. We have a lot o f.............that we'll have t o ...................later this year.

A. Liabilities

Liabilities are amount of money that a company owes, and are generally

divided into two types, Long-term and current, Long-term liabilities or non-

current liabilities include bonds.

Current liabilities are expected to be paid within a year of the date of

the balance sheet. They include:

• Largely suppliers of goods or services to the business who are not paid

at the time of purchase;

• Planned dividends;

• Deferred taxes, money that will have to be paid as tax in the future,

although the payment does not have to be made now.

Current liabilities

Short-term debt 1.555

Accounts payable 5.049

Accrued expenses 8.593

Total current liabilities 15.197

Non-current liabilities

Deferred income taxes 950

Long-term debt 3.402

Other non-current liabilities 1.201

Total non-current liabilities 5.553

Shareholders' equity

Common stock 10.309

Retained earnings 3.900

Total 14.209

Total liabilities and shareholders' equity 34.959

B. Accrued expenses

Because of the matching principle under which transactions and other

events are reported in the periods to which they relate and not when cash is

received or paid, balance sheets usually include accrued expenses, these are

expenses that have accumulated or built up during the accounting year but

will not be paid until the following year, after the date of the balance sheet.

So accrued expenses are charged against income that is, deducted from

profits even though the bills have not yet been received or the cash paid.

Accrued expenses could include taxes and utility bills, for example electricity

and water.

C. Shareholders' equity on the balance sheet

Shareholders' equity is recorded on the same part of the balance sheet as

liabilities, because it is money belonging to the shareholders and not the

company.

Shareholders' equity includes:

• The original share capital (money from stocks or shares issued by the

company.
 • Share premium: money made if the company sells shared at above

their face value (the value written on them) .

• Retained earnings: profits from previous years that have not been

distributed to shareholders.

• Reserves: funds set aside from share capital and earnings, retained

for emergencies or other future needs.

Activity one:

According to text evaluate the following statements with true or false?

1. A liability that must be paid in thirteen months time is classified as

long-term.

2. A company's accrued expenses are like money an individual saves to

pay bills in the future.

3. Shareholders' equity consists of the money paid for shares, and retained

earnings.

4. If companies retain part of their profits, this money no longer belongs to

the owners.

5. Companies can sell shares at a higher value than the one stated on them.

6. A current liability will be paid before the date of the balance sheet.

Activity two:

Choose the right word to complete every expression below.

1 A balance sheet shows the fin a n c ia l......that a company has at a point in

time and where they came from.

(a) records (b) resources (c) returns (d) revenues

2 It is an instant photograph that displays the company's fin a n cia l......at the

end of a business month, quarter or year.

(a) explanation (b) position (c) publication (d) station

3 The organization of a balance sheet reflects this b a s ic ......: assets equal

debts plus equity.

(a) arrangement (b) assessment (c) equation (d) question

4 T h e ...... of accounts is a listing of the accounts that are reflected in the

financial statements.

(a) book (b) chart (c) table (d) outline

5 Assets are often listed in the order of t h e ir ......which means how easy it

would be to convert each asset into cash.

(a) complexity (b) liquidity (c) security (d) simplicity

6 Assets are divided into three categories: Current Assets, Fixed Assets, and

Assets.

(a) Current fixed (b) Different (c) Fixed current (d) Other

7 Current assets will likely be turned into cash or converted into a(n) ......

within a year.

(a) bonus (b) expense (c) option (d) stock

8 Fixed assets are saleable, but are not expected to be converted to cash in

t h e ......course of business.

(a) average (b) equal (c) final (d) normal

9 Liabilities are debts o r ......stemming from goods or services received by

the company.

(a) obligations (b) others (c) out standings (d) owed

10 If the assets of a company are greater than its liabilities, then the equity of

the business is the p o sitive......between the two numbers.

(a) calculation (b) différence (c) dividend (d) sum

Activity three:

Tick the following items with A (assets) or L(liabilities)to identify their kind.

Accounts payable ... Land and buildings .... Inventory....

Accrued expenses ... Investments .... Accounts receivable...

Dividends .... Cash and equivalents .. . Deferred ta x e s.

Long-term debt
 Models of letter- writing.
A. Letter Writing
A good letter must be well thought out and clearly organized on paper, Its message
should be understandable to the reader, and its appearance on the Page should be
well-balanced. Letters that are well-organized inform and content generally follow
a pattern having three basic components:
1. a salutation.
2. a general message (the body).
3. closing and signature.
B. a Memorandum
First,when someone wishes to write to an other within the same company he
should send a memorandum. Memos are used to communicate with other
employees, regardless of where the employees may be located whether in the
same office, in the same building, or in a branch office.
the memo parts:
to: John Quinn
there is no need for an address if the memo goes to workers in the same
company. Titles like Mr and Mrs are generally not used in a Memo Address.
from: Maria Landry
Instead of a signature, the sender signs his or her initials, work titles Like
manager are optional.
date: January 4 , 2017 The date in a memo is usually written on the left side.
subject: Company Health Insurance Policy The subject line is sometimes
abbreviated as “SU B :” The subject line tells what the memo is about.
Body:The body of a memo discusses the subject, Like business letters, most
memos follow a direct organizational plan.These messages present the main
idea in the first paragraph and then follow with the necessary details to support
the opening statements. Finally, the everyday memo concludes with suggestions
for future act or requests guidance on future action.
 Example of mémorandum:
To: All Employées
From: Greg Hamlin, Director of Human Resources
Date: December 15, 201X
Subject: Additional Vacation Day
The board of directors has approved one additional vacation day for every
employee.
This decision is our way of expressing gratitude for the mostProductive
and profitable year in the history of the Maxwell Corporation.
With the approval of your department head, you may select any day Between
January2 and June 3 0 . This day of vacation is in addition to year-end bonuses
you will receive soon.
Thank you for all you have done to make the year uccessful, and best wishes
For a healthy and happy new year.
C.REPORTS
The kind of report you write depends on how you interpret the memo.
Imagine that your managing director has asked you to investigate the health and
safety provisions in your company’s office. These are the notes which you have
taken together with the recommendations which you were asked to make.
Date: March 12 , 2017

Office health and safety provisions as requested by the managing director On

30 March 20 xx, I have investigated the problems which have been rais-
ed concerning office health and safety. In particular, I was asked to talk for
tasks were first to speak to office manager and union representatives
about how accidents or job-related illnesses Happened and next to make
recommendations on how best to improve situation.
Results of studies:
*faulty equipment, lack of serving facilities probably responsible In two
cases:
 *in several cases safety régulations not followed
*new stalf ignorant of départants’ health and safety procedures.
*Also had meetings with union reps and office managers about what to do.
Recommendations / Proposals:
1. Should clearly display safety regulations in canteen and main offices.
2. New staff need informing about safety regulations and policy.
3. Personnel Manager responsible for instructing new staff on Procedures for
handling office equipment and for securing electronic and Mechanical
machinery.
4. Should practice fîrst-aid drill at least once every 6 months.
5. Union suggested replacement of substandard furniture and equipment,
especially:
1. old fashioned screens-cause (eyesight problems)
2. carefully check office lighting(staff complaints of headaches)
3. to have chairs with full back supports, many staff Complaints of
backache
Curriculum Vitae(Writing a Résumé)
Most employers are interested in knowing more about a perspective employee
before they interview them, there is no exact format for a résumé orCV,but
they all have the same basic information,the résumé contains four essential
elements:
personal information, work background, education and work objective.The
personal information should be at the top and include full name, address and
phone number. Optional personal information listed at the bottom of the résumé
could be marital status, health (if excellent), awards, honours and languages.
Some believe that adding hobbies and leisure interests to a résumé adds a
Personal element, here is below an example of C.V.
 The form of curriculum vitae
Name:
Date of birth:
Address:
Marital statusj_ __
Education
Qualifications
Languages

oworking Experience:

Company Dates Position Responsibilities Reason for leaving

Activityl:
Look at the previous report which was written after receiving the
above memo from the MD.
1. Do you think the report is what the MD asked for?
2 . What are the main elements of the report?
3. How effective do you think the report is?
Activity2:
Draw a line between the matching parts.
1. TO: M. Fotbet 2. TO: Travel Insurance
FROM: Health Care FROM: August 8, 1998
DATE: R. Winston DATE: S. Royce
SUBJECT: Dec 15, 1996 SUBJECT: G. Seward
3. TO: March 19, 1998 4. TO: R. Thompson
FROM: Part-time FROM: Employee
Employees Benefits
DATE: M. Crowl DATE: Pete Williams
SUBJECT: S. Marko SUBJECT: June 17, 1996
Activity3:
Decide whether to send a mémo or a letter for each of the following
Situations, tick “Mémo” or “Letter” to indicate your choice.
1. You are a manager. You want to inform your group of the agenda for an
up coming project status meeting. Memo Letter
2. You work for Beta Software Inc, you met a potential customer at a recent
computer show. You want to remind this person that you met, and tell her a
little more about your products. Memo Letter
Activity4:
1. Cite three main difrences between Memo and Letter.
2. supply an example of C.V.
REFERENCES:
-Blinder, A.S, Central banking in theory and practice, MIT Press
Cambridge, UK,1998
-Henry Dauderis, David Annand, introduction to financial accounting, valley
Educational Services, second ed, Canada, 2014.
- Houcine Ali, English studies for business, Alexandria university, Faculty
of commerce, book two, Egypt, 2008.
-Jams.R, Markusen and Keith.E, international trade, theory and
application, Weley, 2002.
-MacKenzie Ian, Financial English with Mini dictionary of Finance,
Language, Teaching Publication Series, 1995.
-Mackenzie Lan, finance, Cambridge University Press, 2006.
-Paul.R, Krugman and Mark Melitz, international economics, theory and
policy, prentice hall, 2011.
-Richard Lewis, David Pendrill, advanced financial accounting, pearson
education, seventh ed, UK, 2004
-Robert Meigs, accounting the basis for business decision, elventh edition,
McGraw-hill, U.S, 1999.
-Steve Flinders, Business general, Pearson education, England, 2002.
-Sweeney. S, English for Business Communication, Student’s Book.
-Thomas p. Edmonds, Frances M McNair, Fundamental financial
accounting concepts, McGraw-Hill, New York, 2011.
Additional sources:
http://www.english-test.net
http://www.global negotiator.com
http://jobsearchtech.about.com
http://www.jobsinusa.al.ru
http://resume-help.org
http://www.tutorials point.com
Summary : Trade policy is one of the many économie instruments for achieving
économie growth, in particular International trade represents a vital part which
interests by buying and selling goods and services across national borders.
To evaluate the country economy in specific aspects we resort to balance of payment
or balance of trade which reflects the difference between the export and the import of
goods.
Financing trade requires several techniques or methods according to concerned
cases; we explore documentary credit, bill of exchange, open account and advance
Payment, moreover to well organize the export there are many documents that should
be duly prepared such as international purchase order, international commercial
invoice, bill of Lading, multimodal bill of Lading, certificate of origin and Inspection
Certificate.
Due to importance of the banks for financing investments and trade the chapter
provides an overview to banking system it describes the functions and characteristics
of central banking, personal banking, commercial banking, and Islamic banking.
Defining accounting as the process of identifying, measuring, recording, and
communicating an organization’s économie activities to users for decision making,
Identify how to use double-entry accounting throughout each transaction is recorded
in at least two accounts where the total debits always equal the total credits, then
explaining bodies of balance sheet, Assets is economic benefits owned by the business
as a result of past transactions.
Liabilities represent debts or obligations of the business that result from past
transactions.
Stockholders’ equity is amount of financing provided by owners of the business and
operations.
However, auditors (internal and external) express an opinion towards the fairness of
the financial statement presentation.
The last chapter give ideas about how to write special letters notably simple letter,
memorandum (internal communication inside the enterprise), report (clarifying and
explaining the situations) and C.V(different personal informations), identify and
explain: their components, their forms and differences between them.