BUSINESS ENGLISH advanced

  Money and Finance

27. A history of money – what makes the world go round

 

Money – it jingles in your pocket, it rustles in your wallet and it clinks in your piggy-bank. Money makes the world go round, but what’s it? It’s a store of value or a measure of wealth. Money is anything that is generally accepted as payment for goods and services. This is a wide definition and, over the centuries, money has appeared in all shapes and sizes; cowrie shells in ancient China, huge stone discs on a South Pacific Island or beads (Wampum) for the North American Indians.

 

 

 

Jingle = a zornăi

Rustle = a foşni

Clink = a zăngăni

Piggy-bank = puşculiţă

Cowrie = scoică, ghioc

Beads = mărgele, mătănii

Wampum = colier de scoici

 

 

From Chickens to Plastic

 

At the end of the day, of course, it doesn’t really matter what shape or size the money takes, as long as everyone recognises it and accepts it in payment. But, over the course of history, money has predominantly been associated with metals, in particular gold, silver and copper.

 

Bartering (troc)

Before metal money become the usual means of exchange, people would swap (schimba) goods and services in a process known as bartering – “I’ll swap you ten chickens for your goat”. This kind of exchange does not really encourage trade, as all sorts of problems arise; are all the chickens of the same size? If I’ve only got five chickens, can I buy half a cow? Obviously, precious metals are a practical alternative to payment in kind (în natură).

 

Four Essential Qualities

For money to be practical and efficient it should possess these qualities:

Durability – in prison, cigarettes may become a medium of exchange – but they’re easy to break and quickly dry up; in other words, they don’t last.

Portability – in some parts of Africa your wealth is measured in cattle. This is fine if you’re trading locally, but if money isn’t easy to carry, how can trade develop?

Divisibility – small units make life much easier – imagine trying to buy a hot dog in New York if the $100 bill was the lowest unit of currency!

Intrinsic value – money should have some worth in itself, otherwise it won’t inspire confidence.

 

Coins

We first read of coins in the Kingdom of Lydia in the 7th century BC. Their coins were of equal weight and therefore of equal value, simplifying trade. Stamping a design onto the coins is called “minting”; Alexander the Great introduced the practice of stamping a picture of the sovereign’s head on the coins, an idea that was soon copied.

Coins however, were not always as valuable as they seemed – they were often clipped or shaved by unscrupulous individuals or debased by the state. The Romans, with the economic pressure of the Punic wars, began a long process of debasement, mixing more and more copper in with the silver, so that the intrinsic value of the coin was far lower than the marked face value.

 

Mint = a bate monedă

Debase = a devaloriza

Debasement = devalorizare

Clipped = retezat, scurtat

Shaved = redus

 

Paper Money

Bank notes were first introduced by the Chinese in the 10th century. They were later used by governments in dire financial straits (în dificultăţi mari financiare) – caused by things like having to finance a war, for example. The English colonies in North America made important strides in the use of bank notes. For various political and economic reasons, the Colonists often found themselves short of coinage. To get round this problem, they used first wampum, then tobacco, rice and whisky or brandy – not exactly the most practical solution. The first paper money issue was by the Massachusetts Bay Colony in 1690. The practice was frowned upon and eventually banned by the mother country, but the inventive money-making instincts of the new United States of America meant that, during the 19th century, most of the money used was in the form of paper dollars. The first fully printed note in England was issued in 1855 – until that time the cashier had to write the name of the payee and sign each note individually.

At first, bank notes were redeemable for gold – on Bank of England notes you will see written “I promise to pay the bearer on demand the sum of…” If you took a ten-pound note to the Bank they used to have to give you ten pounds in gold coin. Britain left the gold standard in 1931 and thus the notes are no longer backed by gold.

 

Strides = progrese, paşi

Short of coinage = lipsă de monezi

Ban = a interzice, a scoate în afara legii

Frown upon = a nu fi de acord cu ceva

Redeem = a compensa, răscumpăra

 

 

Plastic money

Nowadays many transactions are carried out with “plastic money” such as credit cards. The newest are called “smart cards” and carry small silicon chips that can record every transaction on the card. Research into the cards of the future continues, but the latest development is e-cash, cash to be used across the Internet – you’ll be able to spend money from the comfort of your armchair. If only earning the damn stuff was so easy!

 

 

MONEY TALK – the language of cash

 

Money is so central to our lives that it has spawned (a prolifera) a wealth of specific terminology, idioms and sayings. Great thinkers in all ages have had something to say about it; governments are elected on the strength of how they plan to manage it, empires rise and fall because of it.

 

The Root of All Evil

 

Money is so important to us – people even say it makes the world go round – that it has acquired many nicknames, such as bread, dough, dinero, mazuma, spondulicks, rhino, gravy, dosh, lucre or simply the necessary. Small amounts of it are chickenfeed or peanuts. (în slang: lovele, biştari, parale, bani, câştig)

So what are you thinking about now? A penny for your thoughts! Oh, I see, you like the look of that new jacket – it’ll cost you an arm and a leg. I’m afraid, or, to put it another way, you’ll have to pay through the nose for it.

You may like it so much you insist that money’s no object – but don’t forget: money doesn’t grow on trees, so don’t live beyond your means! If you do go ahead and buy that jacket, your friends will tell you that you might as well flush it (the money) down the toilet. So, if you can’t afford it, buy the cheapo version: you can bet your bottom dollar that nobody will be able to tell the difference.

Of course your attitude to money depends, to a certain extend, on how well off you are. You may be experiencing a liquidity problem or a cashflow problem at the moment; in other words, you’re strapped for cash, broke, or even flat broke. Perhaps you don’t have a dollar to your name, you don’t have a red cent and you haven’t got a bean, in which case you’re as poor as a church mouse!

If, on the other hand, you’ve got plenty of money then you’re filthy rich, or stinking rich or rolling in it – perhaps you had some good business ideas and put your money where your mouth is or cashed in on a golden business opportunity and managed to get rich quick, so now you’re laughing all the way to the bank.

You’ve got money to burn; you’re earning megabucks and, now that you know its power, you believe what people say – money talks! In spite of this, you might be so careful with money that people think you’re mean or stingy (zgârcit). Perhaps they’ll call you a miser behind your back; in the US you’d be called a tightwad (calic, avar).

You might reply that money doesn’t grow on trees – but then others might say that you can’t take it with you (when you die) and so they spend money as if it were going out of fashion. In this case, money burns a hole in their pocket, and you would be the first to remind them that a fool and his money are soon parted. If, on the other hand, you look after the pennies, then the pounds will look after themselves.

 

 

28.  The profits of labor

 

Roman soldiers were given part of their pay in salt, as it was so valuable – at least that’s the excuse the Senate gave!

At the time it was called their salario, and it is for this reason that we still use the word salary to describe the regular monthly payment made to employees – especially white-collars workers. If you receive your pay every week, then you receive wages on payday, in the form of a paycheck in the US, or a paypacket in the UK.

You may find that some of your money is taken from you before you even see it, that is it is deducted at source; in the US these deductions are known as deducks or ducks. They may be for tax and also, in the UK, National Insurance, which means that your take-home pay may be a lot less than you expected!

Those who are unlucky enough not to have a job will be on the dole – receiving unemployment benefit in the UK or on welfare in the US. If you pay money for your retirement then your company runs a pension scheme. If you work more than your normal hours, then you’re paid overtime. If your company has been doing well, you may get a bonus.

If you’re one of the bosses of a newly-privatised monopoly, your employees may call you a fat cat, and part of your pay may take the form of share options; when you started to work for the company you were given a golden hello and, regardless of the company’s performance, you will be given a golden handshake when you leave.

Perhaps you’re the kind of boss that never stops complaining about your employees; if so remember: if you pay peanuts you get monkeys!

You and your fellow top-managers are likely to enjoy a range of fringe benefits or perks – like a free car, house and even private education for your children. This is in lieu of money, and means that you have a high standard of living without having to declare hundreds of thousands of pounds at the end of the tax year. All the expenses the company incurs on your behalf are also tax deductible for the company, so it doesn’t lose out either.

When the time comes to retire, sooner rather then later, for the lucky few who can choose early retirement, you may decide to take your company pension in a lump sum – and finally you can go on that world cruise!

 

White-collars workers = funcţionari

On the dole = ajutor de şomaj, subvenţie de la stat

On welfare = ajutor social

Share options =

Fringe benefit / perks = beneficiu suplimentar

In lieu of money = în loc de bani

Incur = a face, a crea

Lump sum = sumă globală / unică, plată unică

 

 

Borrowing

Many of us go to the bank at some point to ask for a loan – it is often said that a bank manager is someone who lends you an umbrella when the sun is shining and who asks for it back when it starts to rain.

The simplest way to borrow is with an overdraft, or by using the facilities offered by a credit card; but to borrow large sums you’ll probably negotiate a loan with your bank; you can either borrow a fixed amount or agree a credit limit.

If you’re buying a house, then you’ll want a mortgage. If the bank refuses to lend you money, you might resort to borrowing from a finance company or even the local loan shark to pay off your IOUs (I Owe You). For any loan, you should look at the Annual Percentage Rate which takes into account the various charges which will be included in your repayments.

Borrowing from a loan shark can involve exorbitant interest rates. If you’re being gouged in this way, then you may end up being unable to make the repayments. Your debt may be sold to a debt collector or you may receive a visit from the bailiffs in the UK. If you’ve been buying something in instalments or on a hire purchase (HP) scheme, defaulting on the repayments will probably lead to a visit from the dreaded repo (repossesssion) man.

 

Gouged = escrocat, tras pe sfoară

Bailiff = inspector

Dreaded = de temut

 

Forgery

With the invention of money came forgery. Modern counterfeit notes can be extremely difficult to spot and new developments in the production of notes are soon copied by the forgers. Here’s a quick guide to recognizing a counterfeit Bank of England note:

The feel of the paper: it should be crisp and slightly rough in the heavily printed areas.

The watermark: you shouldn’t be able to notice it until you hold the note up to the light; then you can see a picture of the Queen.

The thread: all genuine notes have a thread embedded in the paper. Recent notes have a “windowed” thread which does not appear as a continuous line until the note is held up to the light.

Quality of printing: pure, clear colours and sharp, well-defined lines.

 

Spot = a identifica, a distinge

Counterfeit notes = bancnote contrafăcute

Forgers = falsificatori

Crisp = fragil

Embedded = introdus

 

IDIOMS

 

Hard Times

If you’ve fallen on hard times, you might tell people that you need to watch your spending, your money or your pennies. In the States, you might say that you have to watch every dime. Perhaps your bank account is in the red, so you decide to control your spending and keep track of your expenses more closely. This will certainly involve cutting down on expenses in general, budgeting your money, tightening your belt and saving your pennies.

Almost certainly you will have to cut the frills (unneccessary expenditure), trim (reduce) the budget and go back to basics. If an unexpected expense comes up that you have to meet, you might decide to dip into your savings, or scrounge the money somehow.

If, on the other hand, you splash out on something extravagant, you might justify the expense by telling people that you’ve got enough saved up, that you’ve been saving for a rainy day or that you’re lucky enough to have a nest egg that you’ve finally decided to use.

 

Frills = fasoane, lucruri care nu sunt necesare

Scrounge = a şaprli, a şterpeli

Splash out = a se arunca

 

 

 

 

 

 

 

29. Accounting and financial statements

 

·         Vocabulary

a.       Match up the terms on the left with the definitions on the right.

 

1.      Bookkeeping

A calculating an individual’s or a company’s liability for tax –

2.      Accounting

B writing down the details of transactions (debits and credits) - 

3.      Managerial accounting

C keeping financial records, recording income and expenditure, valuing assets and liabilities, and so on

4.      Cost accounting

D preparing budgets and other financial reports necessary for management

5.      Tax accounting

E inspection and evaluation of accounts by a second set of accountants – audit

6.      Auditing

F using all available accounting procedures and tricks to disguise the true financial position of a company

7.       ‘creative accounting’

G working out the unit cost of products, including materials, labour and all other expenses

 

b.      Match up these words with the definitions below

 

1.       Assets

A a company’s owners

2.       Depreciation

B all the money received by a company during a given period

3.       Liabilities

C all the money that a company will have to pay to someone else in the future, including taxes, debt, and interest and mortgage payments

4.       Turnover 

D the amount of business done by a company over a year

 

 

5.       Creditors (GB) accounts payable (US)

E anything owned by a business (cash investments, buildings, machines, and so on) that can be used to produce goods or pay liabilities

6.       Debtors (GB) accounts receivable (US)

F the reduction in value of a fixed asset during the years it is in use (charged against profits)

7.       Overheads (GB) overhead (US)

G sums of money owed by customers for goods or services purchased on credit

8.       Revenue or earnings or income

H sums of money owed to suppliers for purchases made on credit

9.       Shareholders (GB) stockholders (US)

I (the value of) raw materials, work in progress, and finished products stored ready for sale

10.   Stock (GB) inventory (US)

J the various expenses of operating a business that cannot be charged to any one product, process or department

 

 

·         Reading

Insert the words in vocabulary b) in the gaps in the text below.

 

Accounting and financial statements

 

In accounting it is always assumed that a business is a ‘going concern’, i.e. that it will continue indefinitely into the future, which means that the current market value of its assets is irrelevant, as they are not for sale. Consequently, the most common accounting system is historical cost accounting, which records (1) ………… at their original purchase price, minus accumulated depreciation charges. In times of inflation, this understates the value of appreciating assets such as land, but overstates profits as it does not record the replacement cost of plant or (2) ……… . The value of a business’s assets under historical cost accounting – purchase price minus (3) …….. – is known as its net book value. Countries with persistently high inflation often prefer to use current cost or replacement cost accounting, which values assets (and related expenses like depreciation) at the price that would have to be paid to replace them (or to buy a more modern equivalent) today.

Company law specifies that (4) ………. Must be given certain financial information. Companies generally include three financial statements in their annual reports.

The profit and loss account (GB) or income statement (US) shows (5) ……….. and expenditure. It usually gives figures for total sales or (6) ………. And costs and (7) ……… . The first figure should obviously be higher than the second, i.e. there should be a profit. Part of the profit goes to the government in taxation, part is usually distributed to shareholders (stockholders) as dividend, and part is retained by the company.

The balance sheet shows a company’s financial situation on a particular date, generally the last day of the financial year. It lists the company’s assets, its (8) ………… , and shareholders’ (stockholders) funds. A business’s assets include (9) ……… as it is assumed that these will be paid. Liabilities include (10) ……… , as these will have to be paid. Negative items on financial statements, such as creditors, taxation, and dividends paid, are usually enclosed in brackets.

In accordance with the principle of double-entry bookkeeping (that all transactions are entered as credit in one account and as debit in another), the basic accounting equation is Assets = Liabilities + Owner’s (or Shares’) Equity. This can be rewritten as Assets – Liabilities = Owners’ Equity or Net Assets. This includes share capital (money received from the issue of shares), share premium (GB) or paid-in surplus (US) (any money realised by selling shares at above their nominal value), and the company’s reserves, including the year’s retained profits. Shareholders’ equity or net assets are generally less than a company’s market capitalisation (the total value of its shares at any given moment, i.e. the number of shares times their market price), because net assets do not record items such as goodwill.

The third financial statement has various names including the source and application of funds statement, and the statement of changes in financial position. This shows the flow of cash in and out of the business between balance sheet dates. Sources of funds include trading profits, depreciation provisions, sales of assets, borrowing, and the issuing of shares.

Applications of funds include purchases of fixed or financial assets, payment of dividends, repayment of loans, and – in a bad year – trading losses.

 

 

The profit and loss account (GB) or income statement (US) – calculul rezultatelor, al pierderilor şi a profitului

The balance sheet – bilanţul contabil

Net Assets – activul net