AKT 9 Oct

Unit 1: Vocabulary
To pass this unit, please study the 15 vocabulary words below.
annual financial statements
the set of accounts which are prepared each year
Once a year the shareholders review the annual financial statements to see if the company made
a profit or loss.

auditor
a specialist whose job is to carefully check the accounts and accounting practices of a company
The entire department were scared when the team of auditors arrived and asked to see all of the
previous year's records.

bookkeeper
a person, who may or may not be qualified, that records the financial transactions of a business
A lot of smaller companies use bookkeepers for their daily accounting needs and only use an
accountant for the yearly financial statements.
CA (chartered accountant)
a fully qualified accountant, holding current certification
When the bank asked for confirmation that John would be able to repay the loan, his chartered
accountant provided it.
code of conduct
a set of rules (often used within a company) which show the correct way to behave
All employees must follow the company's code of conduct.
confidentiality
the state of being secret and/or kept secret
James was dismissed when he broke confidentiality and told his wife that the company was
having financial problems.
creative accounting
the use of holes in financial law to have an advantage or to show figures in a deceptive way
Some accountants often use creative accounting to try and cheat the tax authority out of monies
due.
income tax
the tax which is due on personal earnings
Most people complain about the rate of income tax, but for those earning over 40,000 a year
who have to pay 32% it is an even less comfortable situation.
local accounting standards
the set of rules and laws for a country which govern how accounts should be prepared
Multinational corporations need to be aware of the local accounting standards of each country
they operate in.
management accountant
a senior member of the accounting team, who liaises with company owners / directors and
advises on the financial aspects of any planned action
After the meeting with the management accountant, I realized that launching the new product
line didn't make financial sense.
payroll clerk
the member of the accounting team who deals with employees
The sales-director asked the payroll clerk to issue bonuses to the top five sales people.
purchase ledger clerk
(U.S. accounts payable) the member of the accounting team who deals with suppliers, issues
payment for goods and services and keeps track of expenditure
When the supplier contacted the company to ask why the invoice wasn't paid, the purchase
ledger clerk explained that the cheque was in the mail.
sales ledger clerk
(U.S. accounts receivable) the member of the accounting team who deals with sales, raises
invoices and collects payment.
The sales ledger clerk made sure to issue the invoice on the same day as the sale.
tax advisor
a specialist who is able to give advice on matters of taxation
Larger corporations often have a dedicated tax advisor to help them minimize the amount of tax
that they need to pay.
VAT (value added tax)
the tax which is due on the difference between the value of a product or service and the cost of
its production
The government are talking about increasing the value added tax rate next year, which means
the cost of consumer goods will increase.

Unit 1: Introduction to accounting

Below you will hear about just some of the more common careers in the field of accountancy,
there are of course many more, but we don't have time to talk about all of them.

When we consider the accounts team within a company, we generally think about clerks, both
sales ledger clerks and purchase ledger clerks recording the financial information from all
transactions the company makes. Other roles include the payroll clerk responsible for processing
staff salaries and the tax which occurs from them. Higher up the hierarchy we have the
management accountant who finalizes the accounts and prepares the annual financial statements.
The people doing these jobs make sure that the directors or owners of the company always know
its true financial position.

However, accounting is more than just reporting financial data. A good accounts team actually
works to save the company money by minimizing the tax payable and delaying payments so
companies can earn interest from their banks.
These job roles are not so clear in smaller accounting practices, where the accounting staff often
need to perform various tasks from meeting clients to helping with loan applications. Often the
majority of the work in these smaller practices is done by bookkeepers. Generally, the owner of
the practice is the most senior accountant and is usually a chartered accountant, which means that
their signature is accepted on the financial statements.

The job opportunities for accountants don't stop there: auditors are the police of the accounting
world and when they are called into a company it is their job to ensure that the accounts were
done in the correct way and that everything was accounted for. The most feared of these auditors
are the government auditors who are sent to companies suspected of somehow breaking the
rules. Working as an auditor is very different from other accountancy work as there is no routine;
you work in many locations and have contact with many people. Although, you should be thick-
skinned as often the accounting staff in companies do not like the idea of being audited.

Career progression within accountancy often results from a specialist knowledge in a particular
area, tax advisors are able to help their clients lower their tax bill thanks to their in-depth
knowledge of taxation law and specifically what a client can off-set against tax.

As you can see the world of accountancy offers various careers, but in all of these areas there are
some qualities that a potential accountant should have. Firstly, as accounting is the process of
collecting and classifying financial data all accountants need to be perfectionists unwilling to
accept anything less than an exact result. Also, as accountants deal with large volumes of data
they need to have a good eye for detail and a real love of numbers.

A talented accountant will also be able to advise their clients on the best course of action to take
so as to save money and at the same time stay within the local accounting standards.

Accountants have to follow very strict rules and codes of conduct in order to make sure that they
do everything in a legal way. If an accountant breaks these rules they could face severe
punishment, but some accountants practice creative accounting to get around rules without
breaking them. Confidentiality is obligatory for all people working with accounts as the financial
data could be very sensitive.

Whether working in the public or private sector, accountants can expect to earn very good
salaries and also gain valuable knowledge on topics like income tax, value added tax (VAT) and
pension schemes which can help them in their life outside of work. What's more, as accounting is
such an important part of a company's success there will always be a demand for good
accountants.

After reading this text I hope that you will appreciate the complexity and the variety of
accounting and the value accountants serve in an organization. So the next time you hear
someone say that accounting is dull, please correct them. Accounting is about truth and money,
and there is nothing dull about that!