FINANCIAL ACCOUNTING

Accounting is shaped by the environment in which it operates. Just as nations have different histories, values and political systems, they also have different patterns of financial accounting development. In a number of countries accounting information is directed primarily toward the needs of investors and creditors, and "decision usefulness" is the overriding criterion for judging its quality. Financial accounting in the US and Great Britain has had such an orientation for many years. Moreover, these countries have large and developed stock exchanges and bond markets. As a result, a great deal of information is disclosed in companies' financial reports; and determining profitability is an objective of financial accounting. However, in other countries, financial accounting has a different focus and performs other roles. For example, in some countries, financial accounting is designed primarily to ensure that the proper amount of income tax is collected by the national government. This is the case in most South American countries. In other countries, financial accounting is designed to help accomplish macroeconomic policies, such as achieving a predetermined rate of growth in the nation's economy. Whether income tax and economic policy information are also useful to individual investors and creditors is somewhat beside the point. In such countries as Switzerland, Germany, and Japan the environment is characterized by a few, very large banks that satisfy most of the capital needs of business. Ownership also tends to be concentrated. The information needs are satisfied in a relatively straightforward way - through personal contacts and direct visits. Not surprisingly, the financial reports tend not to contain as much information as US companies' reports. And since banks are the primary source of capital, financial accounting is oriented toward creditor protection. France and Sweden offer still another orientation of financial accounting. National government plays a strong role in managing the country's resources. Governments also actively ensure that businesses have adequate capital and will lend or even invest in companies if necessary. Financial accounting is oriented toward decision making by government planners.

7.2.Find in the text and write down English equivalents of the following words and phrases:

1. фінансова звітність

2. створювати(ся), формувати(ся)

3. зразок, модель

4. першорядний, головний

5. оцінювати

6. розкривати(ся), виявляти(ся)

7. призначатися, створюватися

8. податок на прибуток

9. виконувати

10.попередньо встановлений

11.не має відношення до справи

12.потреба в капіталі

13.власність

14.мати тенденцію до чогось

15.простий шлях

16.утримувати, вміщувати

17.першоджерело

18.охорона, захист

19.гарантувати, ручатися

20.достатній капітал

21.прийняття рішень

22.плановик

7.3.Define the key-sentences of each paragraph and translate them into Ukrainian.

7.4.Use the key-words and sum up what the text says about financial accounting.

8.1. Read text 8

TEXT 8