ESP E-LEARNING ENGISH FOR FINANCE 2 (EEF 2)

TABLE OF CONTENTS
Unit 1: Marketing
1.1. What is marketing?
1.2. Market segmentation
1.3. Marketing mix
1.4. Marketing strategy
Unit 2: Quality Management
2.1. What is Quality Management?
2.2. Principles of Quality Management
2.3. Quality improvement methods
2.4. Benefits of Quality Management
Unit 3: Corporate Finance
3.1. What is Corporate Finance?
3.2. Capital Investments
3.3. Capital Financing
3.4. Dividends & Return of Capital
Unit 4 Production and Operations Management
4.1. Understanding Production and Operations Management
4.2. Operations: Policy and Strategy
4.3. International Production and Operations Management (IPOM)
4.4. Value Analysis: An Applied Concept for Manufacturing and Service Industry
Unit 5: Accounting
5.1. Accounting Basics
5.2. Accounting Principles
5.3. Responsibilities of Accountants
5.4. Debits & Credits
Unit 6: Types of accounting information
6.1. Purposes of Accounting
6.2. Financial Accounting
6.3. Management Accounting
6.4. Tax accounting
Unit 7: Financial statements
7.1. Financial statements
7.2. Balance sheets
7.3. Income statements

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7.4. Cash Flow statements
Unit 8: Financial statement analysis
8.1. What is Financial Analysis?
8.2. Sources of information for Analysis
8.3. Leverage Analysis
8.4. Profitability Analysis

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UNIT 5 ACCOUNTING

PREVIEW
1. Match the words or phrases in the box with their definitions (1-10).
Match the following words or phrases in column A with their definitions column B

Column A Column B

1. assets a. anything owned by a company – cash, buildings, machines, etc.

2. expenditure b. calculating how much tax an individual or a company should
pay – or trying to reduce this figure
3. cost accounting
c. checking and evaluating financial records
4. liabilities d. determining the unit cost of a manufactured product, including
5. income indirect costs
6. tax accounting e. keeping financial records and preparing financial statements
f. money that a company will have to pay to someone else – bills,
7.financial accounting
debts, interest, taxes¸ etc.
8. bookkeeping g. recording transactions (purchases and sales) in ledgers
9. auditing h. the money that a company receives from supplying goods or
10.management services
accounting i. the money that a company spends
j. the use of a company’s accounting data by its managers for
planning and control

1–a 2-i 3-d 4-f 5-f 6-b 7-e 8-g 9-c 10 - j

READING
https://blog.hubspot.com/sales/accounting-101
https://www.accounting.com/resources/basic-accounting-terms/
https://www.accountingcoach.com/accounting-basics/explanation
https://www.investopedia.com/terms/a/accounting.asp
What is accounting?
Accounting is the process of recording financial transactions pertaining to a business.
The accounting process includes summarizing, analyzing, and reporting these transactions to
oversight agencies, regulators, and tax collection entities. The financial statements used in
accounting are a concise summary of financial transactions over an accounting period,
summarizing a company's operations, financial position, and cash flows.
How Accounting Works
Accounting is one of the key functions of almost any business. It may be handled by a
bookkeeper or an accountant at a small firm, or by sizable finance departments with dozens of
employees at larger companies. The reports generated by various streams of accounting, such

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as cost accounting and managerial accounting, are invaluable in helping management make
informed business decisions.
The financial statements that summarize a large company's operations, financial
position, and cash flows over a particular period are concise and consolidated reports based on
thousands of individual financial transactions. As a result, all professional accounting
designations are the culmination of years of study and rigorous examinations combined with a
minimum number of years of practical accounting experience.
The Accounting Profession
While basic accounting functions can be handled by a bookkeeper, advanced accounting
is typically handled by qualified accountants who possess designations such as Certified
Public Accountant (CPA) or Certified Management Accountant (CMA) in the United States.
In Canada, the three legacy designations—the Chartered Accountant (CA), Certified
General Accountant (CGA), and Certified Management Accountant (CMA)—have been
unified under the Chartered Professional Accountant (CPA) designation.
A major component of the accounting professional is the "Big Four". These four largest
accounting firms conduct audit, consulting, tax advisory, and other services. These firms,
along with many other smaller firms, comprise the public accounting realm that generally
advises financial and tax accounting.
Careers in accounting may vastly difference by industry, department, and niche. Some
relevant job titles may include:
• Auditor (internal or external): ensures compliance with reporting requirements and
safeguarding of company assets.
• Forensic Accountant: monitors internal or external activity to investigate the
transactions of an individual or business.
• Tax Accountant: strategically plans the optimal business composition to minimize tax
liabilities as well as ensures compliance with tax reporting.
• Managerial Accountant: analyzes financial transactions to make thoughtful, strategic
recommendations often related to the manufacturing of goods.
• Information and Technology Analyst/Accountant: maintains the system and software
in which accounting records are processed and stored.
• Controller: oversees the accounting functions of financial reporting, accounts payable,
accounts receivable, and procurement.

COMPREHENSION QUESTIONS

1. What does the accounting process include?

2. What are common financial statements?
3. What do financial statement summarize?
4. Who can handle basic accounting functions?
5. Who can handle advanced accounting?
6. What does an auditor do in general?
7. What does a tax accountant do in general?

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 8. What does a managerial accountant do in general?
9. What does CPA stand for?
10. What does GAAP stand for?
ANSWERS
1. It includes summarizing, analyzing, and reporting these transactions to oversight
agencies, regulators, and tax collection entities.
2. They are balance sheets, income statements and cash flow statements.
3. They summarize a company's operations, financial position, and cash flows over a
particular period.
4. A bookkeeper
5. qualified accountants who possess designations such as Certified Public Accountant
(CPA) or Certified Management Accountant (CMA) in the United States.
6. In general, an auditor ensures compliance with reporting requirements and
safeguarding of company assets.
7. He/ she strategically plans the optimal business composition to minimize tax
liabilities as well as ensures compliance with tax reporting.
8. He/ she analyzes financial transactions to make thoughtful, strategic
recommendations often related to the manufacturing of goods.
9. CPA stands for Certified Public Accountant in United States and Chartered
Professional Accountant in Canada.
10. GAAP stands for the Generally Accepted Accounting Principles.

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 KEY TAKEAWAYS

Regardless of the size of a business, accounting is a necessary function for

decision making, cost planning, and measurement of economic
performance.

A bookkeeper can handle basic accounting needs, but a Certified Public

Accountant (CPA) should be utilized for larger or more advanced
accounting tasks.

Two important types of accounting for businesses are managerial

accounting and cost accounting. Managerial accounting helps management
teams make business decisions, while cost accounting helps business
owners decide how much a product should cost.

Professional accountants follow a set of standards known as the Generally

Accepted Accounting Principles (GAAP) when preparing financial
statements.

Accounting is an important function of strategic planning, external

compliance, fundraising, and operations management.

Exercise 1: Choose the best answer A, B, C or D to complete each gap in the above
passage.
The Accounting Rules
In most cases, accountants use generally accepted accounting (1) …………… (GAAP)
when preparing financial statements in the U.S. GAAP is a set of standards and principles
designed to improve the comparability and consistency of (2) …………… reporting across
industries. Its standards are based on (3) ………… accounting, a method in which every
accounting transaction is entered as both a debit and credit in two separate general ledger
accounts that will roll up into the balance sheet and income statement.
In most other countries, a set of standards governed by the International Accounting
Standards Board named the International Financial Reporting Standards (IFRS) is used.
(4) ………………. overseeing returns in the United States rely on guidance from the
Internal Revenue Service. Federal tax returns must comply (5) …………… tax guidance
outlined by the Internal Revenue Code (IRC).

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 Tax accounts may also lean in on state or county taxes as outlined by the jurisdiction in
which the business conducts business. Foreign companies must (6) ………….. with tax
guidance in the countries in which it must file a return.
Special Considerations
Accountants often leverage software to aid in their work. Some accounting software is
considered better for small businesses such as QuickBooks, Quicken, FreshBooks, Xero,
SlickPie, or Sage 50. Larger companies often have much more complex solutions to integrate
with their specific reporting needs. This includes add-on modules or in-home software
solutions. Large accounting solutions include Oracle, NetSuite, or Sage products.
The Accounting Cycle
(7) …………….. typically operate in a cyclical environment with the same steps
happening in order and repeating every reporting period. These steps are often referred to as
the accounting cycle, the process of taking raw transaction information, entering it into an
accounting system, and running relevant and accurate financial reports. The steps of the
accounting cycle are:
1. (8) ………….. transaction information such as invoices, bank statements, receipts,
payment requests, uncashed checks, credit card statements, or other mediums that may
contain business transactions.
2. Post journal entries to the general (9) ……….. for the items in Step 1, reconciling
to external documents whenever possible.
3. Prepare an unadjusted trial balance to ensure all debits and credits balance and
material general ledger accounts look correct.
4. Post adjusting journal entries at the end of the period to reflect any changes to be
made to the trial balance run in Step 3.
5. Prepare the adjusted trial balance to ensure these financial balances are materially
correct and reasonable.
6. Prepare the (10) ……………. to summarize all transactions for a given reporting
period.
1. A. principals B. principles C. practices D. problems
2. A. finance B. financing C. financial D.
financially
3. A. single-entry B. double-entry C. triple-entry D. All of them
4. A. Tax accountants B. Financial accountants
C. Managerial accountants D. All of them
5. A. for B. to C. through D. with
6. A. comply B. follow C. obey D. do
7. A. Tax accountants B. Financial accountants
C. Managerial accountants D. All of them
8. A. Collect B. Compute C. Analyze D. Classify
9. A. journal B. book C. ledger D. report
10. A. balance sheets B. income statements

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 C. cash flow statements D. financial statements

1B 2C 3B 4A 5D 6A 7B 8A 9C 10D
Exercise 2: Translate the following passage into Vietnamese
Why Accounting Is Important
Accounting is a back-office function where employees may not directly interface with
customers, product developers, or manufacturing. However, accounting plays a key role in the
strategic planning, growth, and compliance requirements of a company.
Accounting is necessary for company growth. Without insight into how a business is
performing, it is impossible for a company to make smart financial decisions through
forecasting. Without accounting, a company wouldn't be able to tell which products are its
best sellers, how much profit is made in each department, and what overhead costs are
holding back profits.
Accounting is necessary for funding. External investors want confidence that they know
what they are investing in. Prior to private funding, investors will usually require financial
statements (often audited) to gauge the overall health of a company. The same rules pertain to
debt financing. Banks and other lending institutions will often require financial statements in
compliance with accounting rules as part of the underwriting and review process for issuing a
loan.
Accounting is necessary for owner exit. Small companies that may be looking to be
acquired often need to present financial statements as part of acquisition or merger efforts.
Instead of simply closing a business, a business owner may attempt to "cash-out" of their
position and receive compensation for building a company. The basis for valuing a company
is to use its accounting records.
Accounting is necessary to make payments. A company naturally incurs debt, and part
of the responsibility of managing that debt is to make payments on time to the appropriate
parties. Without positively fostering these business relationships, a company may find itself
with a key supplier or vendor. Through accounting, a company can always know who it has
debts to and when those debts are coming due.
Accounting is necessary to collect payments. A company may agree to extend credit to
its customers. Instead of collecting cash at the time of an agreement, it may give a customer
trade credit terms such as net 30. Without accounting, a company may have a hard time
keeping track of who owes it money and when that money is to be received.
Accounting may be required. Public companies are required to issue periodic financial
statements in compliance with GAAP or IFRS. Without these financial statements, a company
may be de-listed from an exchange. Without proper tax accounting compliance, a company
may receive fines or penalties.

READING 2

This Report's detailed analysis of Enron's structured transactions reveals a pattern of

behavior showing that Enron deliberately and aggressively engaged in transactions that had
little or no business purpose in order to obtain favorable tax and accounting treatment. For

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Enron's leaders, financial statement income became paramount, and Enron announced to the
world its target of $1 billion in net income for the year 2000. As Enron's management realized
that tax-motivated transactions could generate financial accounting benefits, Enron looked to
its tax department to devise transactions that increased financial accounting income. In effect,
the tax department was converted into an Enron business unit, complete with annual revenue
targets. The tax de-partment, in consultation with outside experts, then designed transactions
to meet or approxi-mate the technical requirements of tax provisions with the primary purpose
of manufacturing financial statement income. The slogan "Show Me the Money!" exemplified
this effort. Howev-er, a bona fide business purpose, that is, a purpose other than to secure
favorable tax and ac-counting treatment, was either lacking or tenuous in many of the
transactions and clearly was not the impetus for the transactions.
Viewed in their entirety, Enron's structured transactions not only pushed the concept of
busi-ness purpose to the limit (and perhaps beyond) but also highlight several general issues
about the nature of the tax system and a corporations' attitude towards it. Enron's behavior
illustrates that a motivated corporation can manipulate highly technical provisions of the law
to achieve significant unintended benefits. Remarkable in many respects was Enron's ability
to parse the law to produce a result that was contrary to its spirit and not intended by Congress
or the Treas-ury Department.
In transaction after transaction, Enron obtained sophisticated advice and in most
instances re-ceived assurances that the proposed transaction "should" comply with the
technical tax law re-quirements. Often, these assurances were based on highly technical
interpretations of the law even though the transaction produced surprising and questionable
results. Many of the opinions hinged on a determination that the transaction had sufficient
business purpose. Enron repre-sented the business purpose of the transaction, and Enron's
counsel did not bother to look be-yond the representation.
Choose the best answers A, B, C or D
1. According to the author, what was the primary failure of Enron's counsel during the
period of time covered by the report?
A. They did not understand the tax code well enough to see what Enron was doing.
B. They provided bad advice.
C. They took Enron's explanations at face value.
D. They did not understand the transactions Enron had put together.
2. What was the ultimate goal of a structured transaction at Enron?
A. To turn a profit on ordinary economic events.
B. To gain favorable tax and accounting treatments for transactions.
C. To generate a virtual economic loss and then deduct it.
D. To generate long-term capital.
3. How did Enron use its tax department?
A. Devise large transactions to increase its financial accounting income.
B. Monitor the repayment of principal on its notes.
C. Originate unsecured loans
D. Generate false tax reports

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 4. According to the author, what did Enron's approach to structured transactions raise
ques-tions about?
A. The integrity of Enron's executives.
B. The oversight provided by the Internal Revenue Service
C. Congress' ability to write meaningful tax legislation.
D. The nature of the tax system
5. According to the author, what was the obvious weakness in most of Enron's
structured transactions?
A. Enron's advisors did not have a good grasp on the tax code.
C. The transactions were overvalued.
D. The transactions were highly complex.
E. The transactions lacked a credible business purpose.
6. What motivated Enron to engage in structured transactions in the first place?
A. To improve its financial statement income.
B. To keep disappointing news from investors.
C. To break into new markets.
D. To diversify its income sources.
7. Based on the information about Enron in the passage, which of the following
strategies might the tax department at Enron have employed to achieve its goals?
A. Engaging in transactions that emphasized short-term profitability.
B. Filing for bankruptcy.
C. Shifting the tax basis from non-depreciable assets to depreciable assets.
D. Converting short-term liabilities to long-term liabilities.
8. According to the author, what was the primary failure of Enron's counsel during the
period of time covered by the report?
A. They did not understand the tax code well enough to see what Enron was doing.
B. They provided bad advice.
C. They took Enron's explanations at face value.
D. They did not understand the transactions Enron had put together.
1. D 2. A 3. C 4. C 5. D 6. D 7. A 8. A

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