What is double-entry bookkeeping?
There are many business transactions that must be recorded in separate accounts, for example: sales, purchases, debts, expenses, etc.
Each transaction is recorded in a separate account – cash account, the liabilities account. The bookkeepers use a system that records two aspect of every transaction – double-entry bookkeeping.
Every transaction is both a debit – a deduction – in one account and a credit – an addition – in another. For example, if a company buys raw materials for production, it debits its purchases account and credits the supplier’s account.
Each account records debits on the left and credits on the right. The total debits should always equal the total credits. Accountants and bookkeepers call these accounts T-accounts, because they look like a ‘T’ letter - look at the examples below.
Double-entry bookkeeping – zasada podwójnego księgowania
An account - konto
A debit – ‘winien’ – lewa strona rachunku rozliczeniowego, obciążenie
A deduction - potrącenie
A credit – ‘ma’ – prawa strona rachunku rozliczeniowego, uznanie
An addition - dodawanie
An asset – składnik aktywów
A liability – zobowiązanie
To increase – wzrastać
To decrease – zmniejszać się
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Are your relationships harmonious?
''We can improve our relationships with others by leaps and bounds if we become encouragers instead of critics.''
Maintaining good relationships is crucial not only in private life, all good businesses are based on trust and healthy relationships. How to talk about them? Find out more.
Maintain, Strengthen, Foster, Build up, Cement, Cultivate, Encourage, Establish, Improve, Promote
- they all mean more or less that we work on our relationship and build it.
The company strengthened its sales force after the merger.
We are improving relations with customers thanks to better communication.
They always try to maintain proper relations with their suppliers.
– mean that the relationship was disrupted somehow and now we want to bring it back to the previous state.
We managed to restore our relations with the customer who was dissatisfied with our delay in delivery.
Endanger, Sour, Damage, Disrupt, Jeopardise, Sever, Undermine, Strain – all mean more or less that we don’t do much or enough to keep the relationship or even do something negative to damage it.
A strike at our factory disrupted production for several weeks.
Poor after-sales service undermined relations with customers.
His lack of negotiation skills jeopardised the deal.
Cordial, Healthy, Harmonious, Good, Strong, Friendly
We have very healthy mother-daughter relationship.
Their relations were rather cordial.
Strained, Stormy, Broken, Failed, Rocky, Uneasy, Volatile
Their relations were stormy after the argument they had the other day.
Britain has rather volatile relations with EU.
Collocations for Key Business Words
What is a collocation?
It’s a pair of group of words that often go together. They can be made of a verb + noun (set up a business), adjective + noun (direct costs), noun + noun (market leader). You should learn how words combine to sound natural and be more fluent in English.
Collocations for key business words – Verb + …
Verb + a COMPANY
Set up / establish / start a company
The company was established in 1997.
Buy / take over / acquire a company
We are planning to take over our main competitor.
Leave / resign from a company
She resigned from a company because she found a better job.
Manage / run a company
We have been running our company since 2001.
Verb + a CONTRACT / an AGREEMENT
Change / alter / amend a contract
We will have to amend the contract as our situation has changed.
Break / breach a contract
They breach the contract and didn’t supply the goods on time.
Negotiate a contract
The company needs to renegotiate the contract with its suppliers.
Draw up / prepare a contract
I won’t be able to draw up the contract by the weekend.
Enter into / conclude / make a contract
We concluded the agreement on 21st May.
Renew / prolong a contract
They wish to renew the contract.
Terminate a contract
Because our supplier doesn’t meet the provisions of the contract, we need to terminate it.
Verb + COSTS
Bring down / cut / reduce costs
The costs are too high and we need to cut them.
Who will cover the costs of transportation?
The company incurred costs associated with retraining its stuff.
Pay / meet costs
We will have to pay the costs of new software implementation.
Verb + a CUSTOMER / a CLIENT
Attract a customer
What can we do to attract new customers?
Deal with a customer
My main responsibility is to deal with customers and meet their needs.
Look after / take care of a customer
In our company we really look after our customers.
Lose a customer
We can’t afford to lose this client.
Do you want to learn more collocations? Schedule your lesson with me, contact me.
DEPRECIATION VS. AMORTIZATION
When do accountants use the term ‘depreciation’ or ‘amortization'?
When they talk about different types of fixed assets (fixed – assets which are not likely to be converted quickly into cash).
Depreciation – it is a reduction in the value of a tangible asset (e.g. land, machinery, vehicles, equipment, inventory) over time due to wear and tear.
Amortization – it is a reduction in the value of an intangible asset (the one that is not physical in nature e.g. Goodwill, brand recognition, intellectual property) over time.
METHODS OF DEPRECIATION
The popular methods of depreciation include:
Straight-line – depreciation is in equal amounts over the estimated life of the asset.
Double Declining Balance - is an accelerated method, which counts as an expense twice as much of the asset's book value each year compared to straight-line depreciation.
Unit-of-production - is usesuful when an asset's value is related to the number of units it produces and not necessariliy the number of year it is in use.
Let’s compute depreciation using the Straight-line method:
Cost – how much the company paid for the asset
Salvage Value (residual or scrap value) – the estimated book value of an asset after depreciation is complete
Estimated life of asset / Useful life – the estimated number of years the asset is likely to remain in service
Annual depreciation – yearly depreciation
e.g. The company purchased a car for PLN 40.000 – cost of asset, estimated life – 5 years, estimated salvage value – PLN 8.000
Cost – Salvage Value/Estimated life = Annual Depreciation
PLN 40.000 – PLN 8.000/5 years = PLN 6.000
Therefore the annual depreciation of this tangible asset (a car) will amount
Below you will find the glossary of terms (EN-PL) and a video explaining the above mentioned methods of depreciation:
Glossary – EN – PL:
Depreciation - amortyzacja środków trwałych materialnych
Amortization - amortyzacja środków trwałych niematerialnych i prawnych
Assets - majątek, środki
Fixed asset - środek trwały
Tangible asset - środek trwały materialny
Intangible asset - środek trwały niematerialny
Reduction in value - spadek wartości
Goodwill - wartość firmy
Straight-line depreciation - metoda liniowa amortyzacji
Declining-balance depreciation - metoda degresywna amortyzacji
Units-of-production depreciation - metoda amortyzacji przypadająca na jednostkę wyprodukowaną
To compute - obliczyć
To purchase - zakupić
Salvage / scrap / residual value - wartość umorzeniowa, cena po amortyzacji
Estimated life of an asset / Useful life - czas użyteczności środka
Annual depreciation - amortyzacja roczna
Companies manufacturing goods set up prices using different strategies. The prices are influenced by production and distribution costs, however, there other factors which are taken into account:
Retailers use also the following pricing strategies:
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HOW TO TALK ABOUT NUMBERS
In IELTS Writing Task 1, you have to summarise information which is presented in a visual form. There are a few forms you can come across - a line graph is one of them. This type of figure can be used to show trends. The horizontal axis often indicates time, and the vertical axis often shows changes over time.
Look at the example of a line graph presenting CPI (consumer price index) Inflation in Polad in 2018.
Remember you should spend about 20 minutes on this task and write at least 150 words.
In 2018 inflation in Poland fluctuated between 2.1% in January and reaching around 1.9% in December.
The first two months of the year marked a significant drop in CPI, reaching its lowest point of 1.5%. The situation remained stable until March and then the inflation started to increase steadily until June, when it stood at nearly 2.2%. Thereafter, the percentage fluctuated for two months. After reaching a high point in August, it began to decrease gradually, finally reaching almost 1.9%.
Overall, the graph shows the change in inflation in Poland during the period of 12 months, where the average inflation amounted to 1.81%.
How to write the task
Paraphrase the instructions, try to use varied language - use synonyms.
Focus on the main features. Don't describe all the points, describe the trend.
Use different forms. Don't use only numbers, give aproximates (e.g - nearly, almost).
Use verbs of change: rise, increase, drop, fluctuate, remain stable
Use adverbs after verbs: increase steadily, decrease gradually
Use noun phrases: a significant drop, a high point
Once again provide a short overview of the graph, use different forms than in the introduction
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