Current liabilities

Fixed assets

These remain in the firm for a relatively long period of time. Examples include land, premises, machinery, equipment, vehicles. “Fixed assets” is sometimes referred to as fixed capital – that is, the amount of capital invested in the fixed assets.

Current assets

These are constantly being used and replaced during everyday business. Examples include stocks (of both raw materials and finished goods), debtors, and cash. They are sometimes called current or circulating capital. This is because they circulate (“go round” in a circle) in normal trading in the following way.

a) The raw materials are turned into finished goods.

b) The finished goods are sold to customers.

c) The customers pay cash.

d) The cash is used to buy more raw materials.

Liabilities are the debts the firm owes to others. Most firms purchase their assets, particularly their stocks, on credit. This means that the goods have been purchased and are owned by the firm, but they will not be paid for until later. Debts are liabilities.

They may be:

Long-term liabilities

These are debts not repayable for at least a year. Long-term loans are an example.

Current liabilities

3. These are debts which are repayable within a year. Trade creditors (that is, firms from whom goods have been bought on credit) are the main example.

PRESENTATION OF ACCOUNTING INFORMATION

(Предоставление бухгалтерской информации)

The recording and presentation of financial information is the responsibility of the accounting division headed by the finance manager.

A firm`s accounting system should be able to provide the following information:

- a record of day-to-day transactions,

- a statement of how well the firm is running over a period of time,

- a summary of the firm`s financial position at a given date,

- a guide to future action and decision-making.

The first three requirements are met by specific parts of the accounting system. The day-to-day transactions are first noted in the original documents, such as the invoices, credit notes and receipts. They are then summarized in day books before being fed into the ledger where their full effect is recorded. The ledger is made up of individual accounts – one for each item under which information is required.

From the ledger, the balances of some accounts are transferred to the trading and profit and loss account, which shows the profit for the year (that is, the second requirement above), or are summarized in the balance sheet to show the financial position at a given date (the third requirement above).

There is no simple document which directly gives the answer to the fourth requirement. This demands an intelligent interpretation of the whole accounting system (particularly of the ratios), coupled with a good understanding of such factors as economic trends, possible changes in the law and statistics generally.

SOURCES OF FINANCE FOR SMALL BUSINESSES

(Источники финансирования малого бизнеса)

There are a number of sources of capital which can be considered by small business men.

The most obvious source is personal savings. Any entrepreneur should have sufficient faith in his project to back it with his own money. The advantage of an owner using his own money is that the business remains free of commitments to partners or outside lenders. It also means that all the profit will be his. Personal savings, however, are not free of cost. Despite this, personal savings remain the cheapest form of finance available.

Capital can sometimes be obtained in the form of loans from friends, neighbours or relatives. One difficulty here is a friend or a relative, though not keen to lend the money, may not like to refuse. Another disadvantage is that, with any business, there is always risk. This means that, if money is obtained in this way, the borrower may one day have to look the friend or relative in the face and tell him that all the money has been lost – a distinctly unpleasant task.

It may be possible to persuade a person with capital to become a partner in the business. This means that the capital would be interest-free and, unlike a loan, would not have to be repaid. Profits, however, would have to be split. This may be particularly frustrating if the partner is a “sleeping” one.

One more opportunity is to take money from the bank. All commercial banks are involved in lending money to suitable business. The first problem is to convince the bank that the proposed business is likely to succeed. The second is that the bank will probably want some form of “security” for the loan which they can take if the loan is not repaid. Banks may lend the money by a formal loan or simply by allowing the customer to over-draw his account (known as an overdraft).

CREDIT (Кредит)

Credit is a term used to denote transactionsin­volving the transfer of moneyor other property on promise of repayment, usually at a fixed future date. The transferor thereby becomes a creditor, and the transferee becomes a debtor.Hence, credit and debt are simply terms describing the same operation viewed from opposite sides.

Types of Credit

The principal classes of credit are the following:

- commercialcredit,which merchants extend to one another to finance production and distribu­tion of goods;

- investment credit,used by business firms to fi­nance the acquisitionof plant and equipment and represented by corporate bonds, long-term-notes, and other proofs of indebtedness;

- bankcredit, consisting of the deposits, loans, and discounts of depository institutions.

- consumeror personal credit, which comprises advances made to individuals to enable them to meet expenses or to purchase, on a deferred-pay­ment basis, goods or service for personal con­sumption;

- real-estate credit,composed of loans secured by land and buildings;

- public or government credit,represented by the bond issues of national governments;

- internationalcredit,which is extended to par­ticular governments by other governments, by the nationals of foreign countries, or by interna­tional banking institutions, such as the Interna­tional Bank for Reconstruction and Development.

The principal function of credit is to transfer prop­erty from those who own it to those who wish to use it, as in the granting of loans by banks to individuals who plan to initiate or expand a business venture. The transfer is temporary and is made for a price, known as interest, which varies with the risk involved and also with the demand for, and supply of, credit.

Credit puts to use property that would otherwise lie idle, thus enablinga country to more fully employ its resources. Without credit, the tremendous invest­ments required for the development of the large-scale enterprise on which the high living standards of the industrialized world are based would have been im­possible.

WHAT IS MACROECONOMICS? (Что такое макроэкономика?)

Macroeconomics is the study of how the economy behaves in broad outline without dwelling on much of its interest­ing, but sometimes confusing, detail. Macroeconomics is largely concerned with the behaviour of economic aggreg­ates, such as total national product, total investment, and exports for the entire economy. It is also concerned with the average price of all goods and services, rather than the prices of specific products. These aggregates result from act­ivities in many different markets and from the behaviour of different decision-makers such as consumers, governments, and firms. In contrast, microeconomics deals with the behaviour of individual markets, such as those for wheat, computer chips, or straw­berries, and with the detailed behaviour of individual agents, such as firms and consumers.

In macroeconomics we add together the value of cornflakes, beer, cars, strawberries, haircuts, and restaurant meals along with the value of all other goods and services produced, and we study the aggregate national product. We also average the prices of all goods and services consumed and discuss the general price level for the entire economy-usually just called the price level. In practice, the averages of several different sets of prices are used. For example, one important index measures the average price of the goods and services bought by the typical consumer. In Britain it is known as the retail price index (RPI), while the equivalent in some other countries is called the consumer price index (CPI).

We know full well that an economy that produces much wheat and few cars differs from one that produces many cars but little wheat. We also know that an economy with cheap wheat and expensive cars differs from one with cheap cars and expensive wheat. Studying aggregates and averages often means missing such important differences, but in return for losing valuable detail we are able to view the big picture.

In macroeconomics we look at the broad range of oppor­tunities and difficulties facing the economy as a whole. When national product rises, the output of most firms, and the incomes of most people, usually rise with it. When interest rates rise, most borrowers, including firms and homeowners, have to make bigger payments on their debts, though many savers will get a higher return on their savings. When the price level rises, virtually everyone in the economy is forced to make adjustments, because of the lower value of money. When the unemployment rate rises, workers are put at an increased risk of losing their jobs and suffering losses in their incomes. These movements in economic aggregates are strongly associated with the eco­nomic well-being of most individuals: the health of the sectors in which they work and the prices of the goods that they purchase. These associations between the health of the macroeconomy and the economic fortunes of many people are the reason why macroeconomic aggregates (par­ticularly inflation, unemployment, interest rates, and the balance of payments) are often in the news.

CHEQUES (Чеки)

A cheque is a special type of draft by which a bank depositor orders the bank to pay money, usually to a third party. Cheques are usually written on special forms provided by bank for a fee. The forms provided by the bank usually are magnetically encoded to make cheque processing easier for the banking system. However, cheques may be written on blank sheets of paper, forms provided by the depositor or other materials and still be legally effective. The drawee, though, must always be a bank for the instrument to qualify as a cheque.

The bank, according to the contracts with its de­positors, agrees to honor(pay when due) each cheque as long as sufficient funds remain in the depositor's account. As a debtor of the depositor, the bank must honor the cheques in return for the right to use the depositor's funds until the depositor demands their return. Of course, the bank must retain a sizable percentage of all funds deposited so that it can pay cheques when they are presented. The remainder of the deposited funds is loaned at interest to pay for the bank's operations and to earn for the bank's owners.

A person, who deliberately issues a cheque with the knowledge that the funds in the account will be insuf­ficient to pay the cheque when it is presented at the drawee bank, is guilty of a crime. The bank will dis­honor(refuse to pay when due) the instrument and the payee or current owner of the cheque will not get any money for it from that source. In addition, if a cheque is issued to pay a debt, the payoff is not effec­tive until the cheque is presented to the drawee bank and honored.

When a cheque has been lost or stolen, the drawer should direct the bank not to pay it. Such an instruc­tion is called a stop payment order. Banks usually charge a small fee to stop payment on a cheque. If, by mistake, the drawee bank disregards the stop pay­ment order and pays the cheque, the bank must re-credit the account. The bank — not the depositor — must bear any loss. Oral stop payment orders are good only for two weeks unless they are confirmed in writing. Written stop payment orders are good for six months and lapse at the end of that time unless renewed.

Care must be taken when writing or accepting cheques. When you write a cheque, be sure not to leave room for someone to insert figures and words to change the amount of the instrument. Never sign a blank cheque.

COMMERCIAL PAPER (Кредитно-денежные документы)

Commercial paperis an unconditional written or­der or promise to pay money. The most common form of commercial paper is the personal cheque. It was developed hundreds of years ago to serve as a safe substitute for money.

Instead of carrying their gold and silver with them, merchants left their money at the bankers. Then, when merchants wanted to pay a seller for goods they were buying, they wrote an order addressed to their bank. The order directed the bank to deliver a specified amount to the person or the place of the seller's choice. The bank compared the merchant's signature (and perhaps a seal) on the order with the signature left at the bank. The bank would comply with such writ­ten orders because, once the merchant had made a deposit, the bank was legally indebted to the deposi­tor for that amount. Consequently, if the merchant demanded return of the deposit, the bank had to give it back. The same is still true today. Banks still are debtors of their depositors. Also, cheques are still known as demand instruments because they allow depositors to get their money out of banks or have it paid in accord­ance with the depositor's order.

Today commercial papers can be grouped into two broad categories. The first iscomposed of uncondi­tional orders to pay money. In this category are the draft and the cheque. A cheque is a special kind of draft.

The second category is composed of uncondi­tional promises to pay money. In this category are the promissory note and the certificate of deposit (COD).

The word unconditional means that the legal effec­tiveness of the order or promise is not dependent upon any other event.

IOU is not a commercial paper.

.

KINDS OF CONSUMER CREDIT (Виды потребительского кредита)

Credit for consumers falls into two categories: loan credit and sales credit.

Loan credit enables you to borrow money which can then be used to finance a purchase. Sales credit ena­bles you to buy goods and services now and pay for them later. Here are some examples of each.

Home mortgages. Home mortgages are long-term loans (repayable in 10 to 30 years) used to finance the purchase of a home or apartment. Banks, savings and loans and other thrift institutions are the most likely sources of mortgage money. Home mortgages are re­paid with interest, in equal monthly installments, over the life of the loan.

Auto and other consumer loans. Loans for financ­ing the purchase of specific items like automobiles, or other goods and services, are available from a variety of thrift institutions and lending agencies.Auto and other consumer loans are usually repaid in equal month­ly installments over the life of the loan.

Charge accounts.Charge accounts enable consum­ers to make purchases up to a specified limit, without paying cash. There is usually no charge for the use of a charge account if the balance is paid in full at the end of the month. However, interest is likely to be charged on balances that are not paid at the end of one month.

Credit cards. A credit card is a kind of charge ac­count that entitles its holders to shop at many differ­ent places. Master Card, Visa, American Express and Diner's Club are four of the most widely used credit cards. Credit card purchases are billed monthly. Like charge accounts, there is usually no charge for credit card purchases that are paid in full when billed.

People frequently have difficulty borrowing or buy­ing on credit because they have no credit history. To establish a «credit» people must prove that they are willing and able to handle financial obligations.

They might, for example, open a charge account in a department store or apply for a gasoline credit card. Prompt payment of the bills on these kinds of accounts will help to establish a positive credit rating. If per­sons have a savings account, they may already be eligi­ble to apply for a passbook loan against the balance in that account. Here again, prompt repayment will add to credit rating. If necessary, it is possible to borrow before you have established a credit rating if you can find a co-signer. A co-signer is a person with an ac­ceptable credit rating who guarantees to repay the loan if you are unable to do so.

Дата добавления: 2015-08-03