12. Auditing the accounts of a limited company

Every year the accounts of a limited company must be approved by auditors, acting on behalf of the shareholders. Their duty is to check reports about the state affairs of the company. They don’t judge the efficiency of the managing the company.

They check the highlights, making up the Profit Statement, the Balance Sheet, the Directors’ Report.

The Profit Statement (Trading & Profit & Loss Account) shows how the profit for the year is arrived at.

Net Sales of Income – cost of materials, work, overhead charges = trading surplus – depreciation on plant & buildings – auditors’ fee – administration & selling costs = net profit (or loss)

The Balance Sheet is a summarized statement, showing the amounts of funds employed in the business (usually consist of the issued share capital, reserves & retained earnings) & the sources from which they derived.

The totals on the two sides of the Balance Sheet must agree. The total dividend to be paid for the year is a current liability.

13. The work in the Accounts Department. Debtors.

Collecting bad debts is one of the most difficult affairs in the work of the Accounts Department. Retail business is usually done on a cash basis, & wholesale business is done on credit, given for 30 days. Any company prefer to receive long credit from its suppliers.

For each sale an invoice is sent to the customer. It’s the list of the goods delivered & amount owed. At the end of the month each customer is sent an account, showing the total amount due.

Sometimes debtors cannot repay a credit, for example, in case of bankrupt of the company or dishonesty the people, running it.

Accounts not paid in time are called overdue accounts. In very difficult cases a firm employs a professional debt collector. No company wants to get a reputation for being a bad payer, because it will be difficult to get supplies on credit. There are special agencies, which provide information about the financial situation of any company, so the suppliers can judge a credit risk.

14. Insurance for a private company

Every firm insures itself against loss or damage to its property. Blanked insurance means insurance which covers everything, a comprehensive police. The premium is a percentage of the total value of goods.

The underwriters employ adjusters, assessing the loss or damage. This sum usually less than the full insured value of the property.

Often companies & persons insures the goods or property against almost anything that could happen. But most insurance companies put in some exceptions, like war or Act of God.

First you take out a policy, then you put in a claim, & the insurance company, you hope, agrees to meet the claim.

Нет. Types of bank accounts

People have many choices than ever before when they deposit money today. The normal banking account is the current account, running from day to day. A balance is the shown at the end of any day on which there has been a debit or credit entry. No interest is normally allowed on a current account. The holder of a current account must be carefully checked before he gets a cheque book. The bank sends its customer statements of the account quarterly or half-yearly, or more often if he wishes. Commission charge may be debited to the account quarterly or half-yearly.

Deposit account is an account, which is open to earn interest. No cheques are supposed to be collected from deposit account holders and no cheque book is issued. Interest rates may be fixed or variable, they may be simple or compounding. The annual simple interest rate states how much money the bank will pay on a deposit at the end of one year without compounding. However, the interest can be compounded, that is, interest can be earned on accumulated interest as well as the amount initially deposited.

Accounts can be single ownership accounts, that is owned by two or more persons. A single ownership account holder can give a person he or she wishes power of atterny.

To open a bank account a client has to give next information:

full name and address;

his/her occupation. The employee’s name and address.

Plus, two reliable references are normally required.

Any signature on an order to the bank must always be the same as this specimen.