ФЕДЕРАЛЬНОЕ ГОСУДАРСТВЕННОЕ ОБРАЗОВАТЕЛЬНОЕ БЮДЖЕТНОЕ

УЧРЕЖДЕНИЕ ВЫСШЕГО ОБРАЗОВАНИЯ

«ФИНАНСОВЫЙ УНИВЕРСИТЕТ
ПРИ ПРАВИТЕЛЬСТВЕ РОССИЙСКОЙ ФЕДЕРАЦИИ»

ДЕПАРТАМЕНТ ЯЗЫКОВОЙ ПОДГОТОВКИ

Г.А. ДУБИНИНА, И.Ф. ДРАЧИНСКАЯ,

Н.Г. КОНДРАХИНА, О.Н. ПЕТРОВА

АНГЛИЙСКИЙ ЯЗЫК
ЭКОНОМИКА И ФИНАНСЫ

Ч а с т ь 3

ENVIRONMENT

УЧЕБНИК
4‐е издание, исправленное и дополненное

Москва • 2016
 
УДК 81(075.8)=111
ББК 81.2 Англ.
Д79

Рецензенты:
доктор филологических наук, профессор Т.Д. Венедиктова
(МГУ им. М.В. Ломоносова)
кандидат филологических наук, профессор Н.А. Кузнецова
(Российская таможенная академия)

Дубинина Г.А., Драчинская И.Ф., Кондрахина Н.Г., Петрова О.Н.

Д79 Английский язык: экономика и финансы: учебник: в 4 ч./
Дубинина Г.А., Драчинская И.Ф., Кондрахина Н.Г., Петрова О.Н. –
М.: – Финансовый университет, 2016.
ISBN 978‐5‐7942‐1363‐8
Ч. 3: Environment. – 4‐е изд., испр. и доп. – 224 с.
ISBN 978‐5‐7942‐1362‐1

«Environment» – третья часть серии учебников английского языка

для второго этапа обучения студентов финансово‐экономического
профиля. Тематика учебника связана с международными экономичес‐
кими отношениями и рынком финансовых услуг, организационно‐
правовыми формами предпринимательской деятельности и основами
бухгалтерского учета. Все разделы снабжены грамматическими уп‐
ражнениями, комплексным анализом конкретных деловых ситуаций с
ролевыми играми на их основе и предусматривают использование
мультимедийных технологий.

УДК 81(075.8)=111
ББК 81.2 Англ.

ISBN 978‐5‐7942‐1362‐1 (ч. 3) © Дубинина Г.А., Драчинская И.Ф.,

Кондрахина Н.Г., Петрова О.Н., 2016
ISBN 978‐5‐7942‐1363‐8 © Финансовый университет, 2016

– 2 –
 FEDERAL STATE – FUNDED EDUCATIONAL INSTITUTION
OF HIGHER EDUCATION
“FINANCIAL UNIVERSITY UNDER THE GOVERNMENT
OF THE RUSSIAN FEDERATION”

DEPARTMENT OF FOREIGN LANGUAGES

GALINA A. DUBININA, IRINA F. DRACHINSKAYA,

NATALIA G. KONDRAKHINA, OXANA N. PETROVA

ENGLISH
ECONOMICS & FINANCE

Part 3
ENVIRONMENT
TEXTBOOK
 

4 th edition, revised and enlarged

Moscow  2016
 
– 3 –
UDC 81(075.8)=111


 

R e v i e w e r s :
Professor, DSc. (Philology) Tatiana D. Venedictova
(Moscow State University)
Associate Professor, PhD. (Philology) Natalya А. Kuznetsova
(Russian Customs Academy)


Galina А. Dubinina, Irina F. Drachinskaya,
Natalia G. Kondrakhina, Oxana N. Petrova
English: Economics & Finance: textbook: in 4 p./ Galina А.
Dubinina, Irina F. Drachinskaya, Natalia G. Kondrakhina, Oxana
N. Petrova. ‒ M.: Financial University, 2016.
ISBN 978‐5‐7942‐1363‐8
P. 3: Environment. – 4th ed., revised and enlarged ‒ 224 p.
ISBN 978‐5‐7942‐1362‐1
 
“Environment” is the 3 th part of a series of English language textbooks
and is designed to begin English Language study for the students of
Economics and Finance. The textbook focuses on the basic economic
problems: goods and services; supply and demand; opportunity costs and
tradeoffs, utility and prices. Structure of the textbook involves the use of
such innovative foreign language technologies as case analysis, cross‐
cultural analysis, role playing, multimedia presentations, the Internet
research.
UDC 81(075.8)=111

ISBN 978‐5‐7942‐1362‐1 (р. 3) © Galina A. Dubinina, Irina F.

ISBN 978‐5‐7942‐1363‐8 Drachinskaya, Natalia G. Kondrakhina,
Oxana N. Petrova, 2016
© Financial University, 2016

– 4 –
 ВВЕДЕНИЕ
Цель данного учебника – обеспечить руководство аудиторной и
внеаудиторной деятельностью студентов финансово‐экономических
специальностей, связанной с развитием у студентов иноязычных
знаний и умений во всех видах речевой деятельности и реализацией
профессиональной направленности в процессе языковой подготовки.
Учебник состоит из трех разделов, которые имеют единую структуру:
 Language Input – словарь урока с примерами и переводом;
 Reading – текст общеэкономической тематики и упражнения,
направленные на достижение точного понимания текста и
оснащенные речевыми формулами;
 Speaking & Writing – упражнения, предназначенные для
совершенствования навыков говорения и письма;
 Presenting information – задания по отработке навыков публич‐
ного выступления;
 Dialogue – упражнения, направленные на развитие навыков
ведения диалога и полилога;
 Reading for Cross‐Cultural Associations – тексты по меж‐
культурной тематике;
 Case‐study & Role‐play – анализ конкретной деловой ситуации и
ролевая игра на ее основе;
 Grammar Back up – грамматические упражнения и коммен‐
тарий (неличные формы глагола) на лексической основе ма‐
териалов учебника.
Тематика разделов включает себя следующие аспекты:
 рынок финансовых услуг;
 организационно‐правовые вопросы предпринимательской
деятельности;
 бухучет и аудит в финансовой системе государства и системе
управления предприятием;
 страховой рынок и защита бизнеса и личных финансов.
Материалы, представленные в учебнике, позволяют применить
такие образовательные технологии учебной деятельности в области
иностранного языка, как кейс – анализ; мультимедийные презента‐
ции с использованием программы Power Point; ролевые игры и
Интернет‐поиск.
Авторы выражают глубокую признательность преподавателям
Финансового университета, принимавшим участие в апробации
учебника в рамках семинара Института повышения квалификации
преподавателей «Методология и методика преподавания учебных
дисциплин на иностранных языках», выпускникам Финансового
университета, преподавателям кафедры «Иностранные языки‐2» за
помощь в отборе профессионально значимых материалов.
– 5 –


1 ENVIRONMENT OF GLOBAL
FINANCE

AGENDA

1.1 Lead-in Prereading

1.2 Language input Developing vocabulary
1.3 Background information Environment of Global Finance
1.4 Comprehension Understanding the reading
Scanning
1.5 Speaking & Writing Fill-in exercises
Writing reports & compositions
Language focus Word-building: Countries and
nationality adjectives
Presenting information
Skills Focus
1.6 Dialogue 1 Import & Export
Dialogue 2 Trade Restrictions
Supporting materials
1.7 Reading for Cross-cultural
Associations
1.8 Case study & Role play 1 Considering a Countertrade
Proposal
Case study & Role play 2 Limit Car Imports

Writing Essays
Topics for Power Point presentations
– 6 –
1.1 LEAD-IN

Section Overview
In this section you will learn how international finance and banking
have evolved, why countries trade with other countries, on what
principles nations base their economic policies and why trade
restrictions exist.

1.2 LANGUAGE INPUT

accommodate v улаживать; подгонять;
приспосабливать(ся); обеспечивать,
снабжать (with); предоставлять жилье
arrange v устраивать, организовывать,
приводить в порядок; уславливаться,
договариваться, приходить к
соглашению
arrange for something принимать меры, давать
распоряжения о чем-либо
arrangement n устройство, организация;
расположение в определенном
порядке, классификация;
договоренность, соглашение
balance n сальдо; баланс; равенство; остаток;
balance of trade торговый баланс (государственный)
to maintain a(n) (un)favourable поддерживать положительное
balance of trade (отрицательное) сальдо торгового
баланса
balance of payments платежный баланс (государственный)
benefit n прибыль, выгода; пособие, пенсия
benefit v приносить пользу, выгоду, прибыль
to benefit from (by) получать/извлекать пользу, выгоду,
прибыль
bound a обязанный, вынужденный
to be bound to do something быть должным непременно/
обязательно сделать что-либо
cater v обеспечивать, обслуживать
cater for / cater to удовлетворять (требования)
обслуживать, угождать
– 7 –
charge n плата, сбор, тариф, расход,
начисление, взыскание
charge v относить на дебет/счет, начислять,
взыскивать
commitment n обязательство; затраты, вложение
капитала; вовлечение, втягивание
to meet commitments выполнять обязательства
to enter into commitments взять на себя обязательства
credit v кредитовать, проводить по кредиту,
заносить на кредит
debit v дебетовать, относить на счет дебета,
проводить по дебету
draw v брать, снимать (деньги со счета)
draw on the reserves заимствовать из/использовать,
сокращать резервы
a withdrawal снятие (со счета), расход
eliminate v устранять, исключать
eliminations исключение внутрифирменных
расчетов
entry n (бухгалтерская) запись, проводка
to calculate entries in the подсчитать проводки в
balance sheet балансовом отчете
equity n акционерный капитал; собственный
капитал; активы; доля акционера в
капитале предприятия; акция
equity market рынок акций
estimate n оценка; исчисление; подсчет; смета;
калькуляция
estimate v исчислять, подсчитывать, составлять
смету, определять на глаз
forwarder n перевозчик, экспедитор
freight forwarder экспедиционное агентство, органи-
зующее перевозки партий грузов
fee n вознаграждение; гонорар; взнос; сбор;
комиссия, комиссионный сбор, плата
за услуги
fees and royalties доходы от продажи патентов,
лицензий и технического опыта
grant n субсидия, дотация, безвозвратная
ссуда, дар
grant v предоставлять субсидию, дотацию
– 8 –
holding владение, запас, пакет акций
holdings вклады, авуары
impose v налагать, облагать, вводить
to impose tariffs / quotas облагать пошлиной / вводить квоты
inflow/outflow of money приток/отток денег
insure v cтраховать(ся), застраховать(ся)
insurance n страхование; страховой платеж;
страховой полис
levy v взимать / облагать (налогом)
maintain v сохранять, поддерживать
panel n группа экспертов (для обсуждения
общественно важного вопроса);
участники дискуссии, викторины и т.
п. (в телепередаче)
fact-finding panel комиссия по расследованию
government panel правительственная комиссия
impartial panel группа независимых экспертов
provide v предоставлять, давать
provide for (something) обеспечивать (средствами к
существованию) / содержать
provide with (something) предусматривать, обусловливать;
снабжать, обеспечивать
raise v (money) cобирать / занимать / добывать /
получать деньги
reimburse v возвращать, возмещать, компенси-
ровать, покрывать, оплачивать
remittance n перевод (денег), ремитирование,
пересылка; денежный перевод
immigrant remittances денежные переводы иммигрантов
на родину (статья в платежном
балансе)
require v требовать, приказывать, нуждаться
requirement требование, потребность
restrict v ограничивать
restriction n ограничение
restrictions ограничительные меры
restrict something. by ограничивать что-либо
something посредством чего-либо
syn to impose constraints син вводить ограничения

– 9 –
restrictive a ограничительный, ограниченный,
запрещающий
revenue n доход, государственные доходы
revenue duty фискальная пошлина
revenues доходные статьи
tax revenue доход от налогов
salary n жалованье, оклад
self-sufficient a самостоятельный, самообеспеченный
shipping agent экспедитор, агент по погрузке и
отправке грузов
stock n основной капитал; фонды; доля
акций,
stocks n, pl акции; пакет акций; фонды (часть
syn: share суммарного акционерного капитала,
принадлежащая определенному лицу
или группе лиц)
surplus n излишек, избыток, превышение,
остаток; активное сальдо (торгового
или платежного баланса)
tariff n тариф (налог, которым облагаются
ввозимые в страну товары на основе
их стоимости или количества,
инструмент государственной
экономической политики для защиты
внутреннего рынка); расценка;
пошлина; шкала ставок/сборов
protective tariff протекционистский тариф
revenue tariff фискальный тариф
tariff v производить расценку; облагать
пошлиной
tax n налог, сбор, пошлина
tax v облагать налогом или пошлиной,
взимать /назначать
trade n торговля, отрасль торговли
visible (invisible) trade торговля товарами (услугами)
to trade item for item менять товар на товар
to trade the surplus торговать излишками
yield v a profit/a loss приносить доход / убыток

– 10 –
 DEVELOPING VOCABULARY
1.2.1 Consult a dictionary and practise the pronunciation of the
follo-wing words and word combinations, quote the sentences
in which they are used in the text or submit the examples of
your own:
an irrevocable letter of credit Benelux
associates Brazil / Brazilian
chamber of commerce Carlisle
cooperation in politics China
cooperative Chinese
crucial impact Cleveland
deposits in foreign currencies Colombia
distributor Columbia
emphasis France
freight forwarder Germany
haulage firms Greece
in monetary terms Guatemala
real recital of facts and surmise Hong Kong
the export of chemicals Japan
the import of merchandise Japanese
the subsequent profits Lagos
the surplus of petroleum Nigeria / Nigerian
to accomplish Norway
to be operative Ohio
to be reimbursed Peru
to be vulnerable to dangers Scandinavia
to determine an excess Sweden
to export the manufactured goods Switzerland
to have the expertise Taiwan
to process raw materials Taiwanese
to produce automobiles Zaire
to purchase insurance for the cargo’s voyage Zurich
to record a debit
to set up a trading subsidiary
to transfer title to a middleman
to yield a profit
variables
variety of sources
– 11 –
1.2.2 Match the English word combinations in the left-hand column
with the Russian equivalents in the right-hand column:
1. to accommodate a deficit in A добиться чего-либо посредством
the balance of payments введения пошлин
2. to be insufficient to cover B перерабатывать сырье в
further withdrawals промышленные товары
3. to assure somebody of the C вводить ограничения, оказывать
means to do something давление
4. payment by bill of exchange D подвергаться опасностям
5. payment on open account E ставки налога на добавленную
стоимость
6. to be prohibited from F получать вознаграждение за
something / doing страхование внешней торговли
something других стран
7. to process raw materials G быть уравновешенным
into manufactured goods проводкой (сальдировать)
8. payment by irrevocable H быть недостаточным для покрытия
letter of credit дальнейших расходов
9. to be vulnerable to dangers I договориться о перевозке
10. to diminish the cargo’s value J потерять/уничтожить преимущества
11. VAT(value added tax) rates K оплата безотзывным аккредитивом
12. to possess little in the way L уверить кого-либо в наличии
of exportable commodities средств для совершения чего-либо
13. to accomplish something by M уменьшить объем / количество/
imposing tariffs стоимость груза
14. to pay the commissions and N устранить дефицит
salaries платежного баланса
15. payment on a cash with O иметь мало товаров, пригодных для
order basis экспорта
16. to earn fees for insuring P выплачивать комиссионные
other nations’ foreign trade вознаграждения и жалованье
17. to impose constraints Q оплата по открытому счету
18. to be balanced by an entry R установить дефицит или профицит
19. to determine a deficit or S иметь запрещение на что-либо или
surplus (excess) какое-либо действие
20. to eliminate advantages T внебиржевой рынок
21. to arrange for transportation U наличный расчет при выдаче заказа
22. OTC market V оплата переводным векселем
– 12 –
1.3 BACKGROUND INFORMATION
Environment of Global Finance
There are clear benefits to being open to international trade: trade
allows people to produce what they produce best and to consume the great
variety of goods and services produced around the world. The key
macroeconomic variables that describe an interaction in world markets are
exports, imports, the trade balance, and exchange rates. Economies buy
and sell goods and services in world product markets, and buy and sell
capital assets in world financial markets.
When nations export more than they import, they are said to have a
favourable balance of trade. When they import more than they export, an
unfavourable balance of trade exists. Nations try to maintain a
favourable balance of trade, which assures them of the means to buy
necessary imports. Some nations, such as Great Britain in the nineteenth
century, based their entire economy on the concept of importing raw
materials, processing them into manufactured goods, and then exporting
the finished goods.
In addition to visible trade, which involves the import and export of
goods and merchandise, there is also invisible trade, which involves the
exchange of services between nations. Brazilian coffee is usually transported
by ocean vessels because these ships are the cheapest method of
transportation. Nations such as Greece and Norway have large maritime
fleets, which can provide this transportation service.
The prudent exporter purchases insurance for his cargoes’ voyage.
While at sea, a cargo is vulnerable to many dangers, the most obvious being
that the ship may sink. In this event, the exporter who has purchased
insurance is reimbursed. Otherwise, he may suffer a complete loss.
Insurance is another service in which some nations specialize. Great Britain,
because of the development of Lloyd’s of London, is a leading exporter of
this service, earning fees for insuring other nations’ foreign trade.
Some nations possess little in the way of exportable commodities, but
they have a mild and sunny climate. Tourists spend money for hotel
accommodation, meals, taxis, and so on. Tourism, therefore, is another form
of invisible trade.
In the past twenty years, millions of workers from the countries of
southern Europe have gone to work in Germany, Switzerland, France,
the Benelux nations, and Scandinavia. The commissions and salaries
that are paid to these people represent another form of invisible trade.
– 13 –
 The workers send money home to support their families. These are
called immigrant remittances. They are an extremely important kind of
invisible trade for some countries, both as imports and exports.
The main difference between domestic trade and international trade
is the use of foreign currencies to pay for the goods and services crossing
international borders.
Whenever a country imports or exports goods and services, there is a
resulting flow of funds: money returns to the exporting nation, and money
flows out of the importing nation. Trade and investment is a two-way
street, and with a minimum of trade barriers, international trade and
investment usually makes everyone better off.
Investments can have a crucial impact on a nation’s balance of
payments. When an investment is made, capital enters a country, enabling
it to import manufactured materials to build a new manufacturing plant
and to pay workers to build it. Once the plant is operative, it provides both
jobs and taxes for the host country and, in time, produces new
manufactured goods for export. In this way, investment acts as a catalyst
in economic growth for the developing countries throughout the world.
In subsequent years, an investment should yield a profit. Dividends,
sums of money paid to shareholders of a corporation out of earnings,
can then be remitted to the investing country. From the perspective of the
balance of payments, in the year the investment is made, the host country
credits income to its balance of payments, and the investing country
records a debit. This is reversed in the following years. The dividends
then represent an expense for the host country and income for the investing
country.
After calculating all of the entries in its balance of payments, a
nation has either a net inflow or a net outflow of money.
The nation’s reserves may be compared to an individual’s savings. For
a nation, they are maintained in holdings of gold and official deposits in
foreign currencies. A deficit in the balance of payments can be
accommodated by drawings on (removing some of) the reserves, that is
the previous savings. But if a nation’s balance of payments continues in
deficit for some time, then the reserves will be insufficient to cover
further withdrawals, and additional measures must be taken.
The most direct means of correcting a deficit in the balance of
payments and having an immediate impact is by reducing imports. This
can be accomplished by imposing tariffs (taxes), quotas (import
restrictions), or both. If successful, the cost of imports rises in the local
– 14 –
market, and the imported goods are comparatively more expensive to the
consumer than locally made goods. When a quota is imposed, the quantity
previously imported and paid for is reduced.
In either case, the net effect is the reduction of the nation’s outflow of
money. Other measures may limit invisible trade expenditures. For
example, citizens may be prohibited from taking more than a specified
amount of money with them when they travel abroad.
Capital for investments abroad can be restricted by requiring
government approval for any new foreign investments. When the United
States encountered serious balance of payments problems in the 1960s, the
government restricted the loans that United States banks could extend
abroad. This was a large item in its balance of payments because of the
United States’ role in world finance. The government also restricted the
amount that United States corporations could invest overseas.
If these measures are insufficient, a country may devalue its currency.
This immediately makes imports more expensive and exports more
competitive, since the importing country can now pay for the first
country’s imports with less of their currency than previously. In time,
these advantages are eliminated. A nation must at all times combine
devaluation with other effective measures to balance its economy,
resulting in a reasonable level of employment and low rate of inflation.
Gold has been the traditional reserves. At one time, gold moved freely
from country to country, but successive constraints have been imposed
in the past years. Today, gold counts as only one form among many in the
reserves of a country. A number of countries have an agreement with the
Federal Reserve Bank of New York to hold their gold in safekeeping.
This makes it possible for these countries to buy gold from or to sell gold
to other countries by merely moving the gold from one custodian vault to
another at the Federal Reserve Bank of New York.
Free trade agreements often cause disputes between countries,
especially when one country thinks the other is engaged in restrictive
practices. Occasionally, trade wars erupt, and sanctions or embargoes
are imposed on countries, and may not be lifted for long periods. On the
other hand European countries closely related economically and enjoying
good relations have entered into monetary union and have a single
currency.

– 15 –
1.4 COMPREHENSION
Understanding the reading
1.4.1 Give extensive answers to the questions. Use the following
expressions to present your answers:
 On second thought I should admit that ...
 Let’s look beneath the cabbage leaf ...
 In a nutshell, ...
 To cut a long story short, ...
1. What are the basic components of dealings in the world product and
financial markets?
2. Why are exports and imports the most important international activity
for most nations?
3. What does the word combination “balance of trade” mean and how is
a favourable balance of trade maintained?
4. What are the ways of improving a deficit in the balance of payments?
In what way does it affect imports?
5. In what way can investments affect a nation’s balance of payments?
6. In what way can capital for investments abroad be restricted and why?
Give facts to illustrate it.
7. When do the countries devalue their currencies? What impact does it
have on the nation’s balance of payments? Why are the advantages
derived from devaluation soon eliminated?
8. How do you account for the role and function of insurance in
international trade?
9. What is purchased when a nation hires work force from another
country? Why does immigration contribute to invisible trade of some
countries alongside with imports and exports?
10. What happens to the imported goods when a tariff or a quota is
imposed?
11. What are the peculiarities of using gold in financial relations? Why do
some countries have an agreement with the Federal Reserve Bank of
New York to hold their gold in safekeeping?
12. What are the advantages and disadvantages of free trade
arrangements?

– 16 –
 Scanning1
1.4.2 Scan the text to determine whether these statements are true (T)
or false (F). With a partner, discuss why.
e.g. In my opinion it is true that/I’m afraid it is false that ..., because ...

1. If the country runs a trade deficit, net exports are negative, exports
are less than imports, indicating that the country sells fewer goods
and services abroad than it buys from other countries.
2. As the price in any market serves the important role of coordinating
buyers and sellers in that market, international prices help coordinate
the decisions of consumers and producers as they interact in world
markets.
3. The prudent exporter purchases insurance for his cargo’s voyage
because the exporter who has purchased insurance pays less for his
cargo’s voyage.
4. If the exchange rate changes so that a dollar buys more foreign
currency, that change is called a devaluation of the dollar.
5. An economy’s saving can be used either to finance investment at
home or to buy assets abroad.
1.4.3 Scan the text and find the information to complete the following
lists:

1. Invisible trade involves the exchange of such services between nations, as

A ________________________________________________________

B ________________________________________________________

C ________________________________________________________

D _______________________________________________________

E ________________________________________________________

                                                            
1
Scanning means reading very quickly in order to find key factors or figures that are contained
within a text.
– 17 –
2. Investments significantly affect a nation’s balance of payments, because
capital enters a country enabling it
A ________________________________________________________
B ________________________________________________________
C ________________________________________________________
D _______________________________________________________
E ________________________________________________________

F ________________________________________________________

1.4.4 Scan the text again and find the English equivalents for the
following:
 перерабатывать сырье в промышленные товары
 договориться о перевозке
 производить на внутреннем рынке
 соответствующая прибыль
 подвергаться опасностям
 оплата безотзывным аккредитивом
 вкратце, ...
 короче говоря, …
 продавать кому-либо излишки
 выплачивать комиссионное вознаграждение
 оплата переводным векселем
 предусмотрительный экспортер
 получить возмещение
 места (размещение, проживание) в отелях
 посмотрим на это с другой стороны
 получить сравнительное преимущество
 понести абсолютные убытки (потерять все)
 уверить кого-либо в наличии средств для совершения чего-либо
 морской флот
 отрицательное сальдо торгового баланса
 жалованье
 уменьшить стоимость (количество, объем) груза
 наличный расчет при выдаче заказа
– 18 –
  получить вознаграждение за страхование внешней торговли
других стран
 иметь мало товаров, пригодных для экспорта
 экспортировать готовую продукцию
1.4.5 Split into groups and develop the following ideas. Make use of
the active vocabulary given in brackets:
1. Many factors that might influence a country’s exports, imports, and net
exports change over time, so does the amount of international trade.
These factors include the following:
 The tastes of consumers for domestic and foreign goods
 The prices of goods at home and abroad
 The exchange rates at which people can use domestic currency to
buy foreign currencies
 The incomes of consumers at home and abroad
 The cost of transporting goods from county to country
 The policies of the government toward international trade
(within borders, to have enough of a particular item to meet the needs,
to produce domestically/on an external market, to derive a
comparative advantage, innovation, to base the economy on a certain
concept, to earn money to buy necessities, to maintain a favourable/
unfavourable balance of trade, to import/export raw materials, to
process something into something, manufactured/ finished goods, the
subsequent profits, to involve the exchange of services, method of
transportation, maritime fleet, to arrange for something, to rent space)
2. A nation’s saving and investment are crucial to its long-run economic
growth.
(to be maintained in holdings of gold and official deposits in foreign
currencies, to be accommodated by drawings on the reserves, to be
insufficient to cover further withdrawals, means of correcting a deficit
in the balance of payments, to be accomplished by imposing tariffs
and quotas, the reduction of the nation’s outflow of money, to limit
invisible trade expenditures, to be prohibited from something, to be
restricted by requiring government approval for something, to devalue
the currency, a reasonable level of employment)

– 19 –
1.5 SPEAKING & WRITING
Language focus
Word Building
1.5.1 a. Consult a dictionary and practise the pronunciation of the
following words and word combinations:
Countries and nationality adjectives
Adjectives ending in -an (the most common type)
Algeria – Algerian America (the USA) – American
Russia – Russian Australia – Australian
India – Indian Indonesia – Indonesian
Italy – Italian Germany – German
Norway – Norwegian Korea – Korean
Egypt – Egyptian Brazil – Brazilian
Belgium – Belgian Argentina – Argentinean
Kenya – Kenyan Canada – Canadian
Malaysia – Malaysian Nigeria – Nigerian
Adjectives ending in - ese
Japan – Japanese China – Chinese
Portugal – Portuguese Vietnam – Vietnamese
Taiwan – Taiwanese
Adjectives ending in - ish
Britain (the UK) – British Finland – Finnish
Poland – Polish Sweden – Swedish
Spain – Spanish Denmark – Danish
Turkey – Turkish
Adjectives ending in - i
Pakistan – Pakistani Saudi Arabia – Saudi / Saudi Arabian
Others
France – French The Netherlands – Dutch
Switzerland – Swiss Greece – Greek
The Philippines – Philippine Hong Kong – Hong Kong
– 20 –
b. Fill in articles “a” or “the” wherever necessary.
1. … Chinese don’t like Japanese. That’s a matter of history.
2. … British have got richer, but not as fast as other countries.
3. Helped by increasing popularity of … English as an international
language and London’s position mid-way between the Asian and
American time zones, the British financial institutions seem more
dynamic than ever.
4. …Vietnamese is a native or inhabitant of Vietnam, or a person of …
Vietnamese descent.
5. … English is the most widely learnt second language.
6. The two most important minorities in … Philippines include the
Chinese and … Spaniards.
7. … English is the principal language of Great Britain, the US, Ireland,
Canada, Australia, New Zealand, and many other countries.
8. A large majority of … Danes speak … English as a second language.
9. As a foreign language, … Dutch is mainly taught in primary and
secondary schools in areas around … Netherlands.
10. … Japanese also improved public education and made it compulsory
for all residents of … Taiwan.
11. After World War II, when … Japan lost, … Chinese of Taiwanese
origin persecuted, robbed and sometimes beat up … Japanese.
12. In … Finland as a whole … Swedish is one of the two "national"
languages, with the same official status as … Finnish language.
13. … Swiss provide money a safe, boring place where nothing dramatic
will happen to it.
14. The Bureau of the Census counts anyone … Indian who declares
himself or herself to be one.
c. Chose the correct variant.
Scandinavia/Scandinavian people, mainly Sweden/Swedes and
Norwegian/Norwegians, were both listed and sent over 10,000
immigrants each, with the presence of around 7,000 Danes/Danish.
Finns/Finnish and Estonians/Estonian were also present, especially in
the Southeast, and often forgotten Icelanders/Iceland and Faroese, were
pretty rare, but left descendants. The Baltic Region was also entirely
present, where Lithuanians/Lithuania composed the most numerous
group, with ~50,000 entrances, followed by Latvians/Latvia.  Jews/
Jewish, mostly of Askhenazic origin, also arrived as around 48,000
Jewish/Jew citizens from several countries chose Brazil/Brazilian as their
destination.

– 21 –
Skills focus
1.5.2 a. Read the extract and fill in prepositions wherever necessary.
b. Discuss the text.
c. Give the text the appropriate heading.
_________________________________
Financial decisions in Britain are heavily influenced … what happens
overseas. The exchange rate of the pound, foreign interest rates, and the
view that outside investors take … Britain as a profitable place to park
their money all profoundly influence … decisions about saving and
investment by British people. It is important, however, to distinguish …
the impact on ordinary people and the impact … professional investors
who manage trillions (thousands of billions) of pounds … pension funds,
life insurance, and bonds on behalf … individuals. If I find the interest rate
… my house mortgage has gone … because German interest rates have
risen, there is little I can do, at least … the short run. I may be able to
counteract the effect on my mortgage … shifting savings … accounts
which offer higher interest rates and many British people have become
skilled … hunting down the banks which offer the most favourable returns.
In the long run, these innumerable individual decisions can and do move
markets.
1.5.3 a. Complete the text by using the following word combinations
from the box and fill in the grid.
b. Discuss the text.

A stock market G industrial country

B wealthy H collective investment
C invest heavily I goods
D savings J financial centre
E Fund managers K Insurance companies, pension funds
F assets L trading nation

…(1)… can move markets immediately. Their power has grown

immensely. …(2)… and other types of …(3)… own at least 60 per cent of
the …(4)… British fund managers …(5)… overseas. About a quarter of
pension fund …(6)… are abroad, a much bigger proportion than for any
other major …(7)… Partly this is historical. In the nineteenth century,
when Britain was an imperial power and the richest country in the world,
the increasingly …(8)… middle class invested in …(9)… everywhere
– 22 –
from Shanghai to San Francisco. It also reflects Britain’s continued
importance as a …(10)…, exporting more …(11)… per head of population
than most other countries. Above all, London has survived Britain’s
relative economic decline (the British have got richer, but not as fast as
other countries) and remained the world’s most important international
…(12)… .
1 2 3 4 5 6 7 8 9 10 11 12

1.5.4 a. Read the text, ignoring the missing parts.

…(1)… , where people buy and sell foreign currency, also referred to
as the “Forex” or “FX” market, …(2)…, 30 times larger than the combined
volume of all US equity markets1.
Currencies are traded in pairs, for example Euro/US Dollar
(EUR/USD) or US Dollar/Japanese Yen (USD/JPY).
…(3)… . About 5% of daily turnover is from companies and
governments that buy or sell products and services in a foreign country or
must convert profits made in foreign currencies into their domestic
currency. …(4)… , or speculation.
For speculators, the best trading opportunities are with the most
commonly traded (and therefore most liquid) currencies, called “the
Majors”. …(5)… , which include the US Dollar, Japanese Yen, Euro,
British Pound, Swiss Franc, Canadian Dollar and Australian Dollar.
Forex trading begins each day in Sydney, and moves around the globe
as the business day begins in each financial center, first to Tokyo, London,
and New York. …(6)…, and investors can respond to currency
fluctuations caused by economic, social and political events at the time
they occur – day or night.
…(7)… , due to the fact that transactions are conducted between two
counterparts over the telephone or via an electronic network.
b. Look at the missing parts A-H and fit them in the gaps. There is one
extra you don’t need.
A The other 95% is trading for profit
B is the largest financial market in the world
C It’s a 24-hour market
D The Foreign Exchange market
E The FX market is considered an Over The Counter (OTC1) or
“interbank” market
                                                            
1
Рынки капитала.
– 23 –
F Today, more than 85% of all daily transactions involve trading of the
Majors
G There are two reasons to buy and sell currencies
H foreign money held by a government to support its own currency

1 2 3 4 5 6 7
D

c. Find words or word combinations in the text that mean the following.
…………. market where people buy and sell foreign currencies
…………. money of another country
…………. number of times something is used or sold in a period (e.g. a
day); amount of sales of goods or services by a company
…………. money gained from a sale which is more than the money
spent
…………. deal which is it is hoped will produce a profit
…………. someone that has the same job or purpose but in a different
country or organisation
…………. another word for stocks and shares
…………. up and down movements of the exchange rate
…………. market in shares which are not listed on the official Stock
Exchange, usually carried out by phone or using electronic
means
…………. by way of
…………. set of computers which are connected to each other and
operate as part of the same system, able to exchange
information and messages

                                                                                                                                                                                                     
1
Внебиржевой рынок
– 24 –
Presenting information
1.5.5
A. Search for keywords invisibles, trade balance, financial centers,
Lloyds Underwriters, Forex, Eurocurrency market in the Internet to
find further information about one of these items. Report on your
findings in a presentation using the following points and helpful
phrases from the chart:
Introduction: We make general remarks about the subject.
Main Part: We present our viewpoints and justify them with
examples.
Conclusion: We give the gist of the presentation again briefly in a
different way.

Greetings Introduction Main Part Conclusion

(Preparing the (Delivering the (Winding-up)
audience) message)
Dear listeners! I’m going to be Firstly ... . So, to cut a long
talking about ... . Secondly ... . story short … .
Good I’ll start with ... and This brings me to In conclusion it’s
morning, then move on to ... . my next point ... . important to remind
ladies and Finally, I’m going to you …
gentlemen. …
I think, if you don’t To bolster the Let’s dot the “i”s
mind we’ll leave argument1 I and cross the “t”s
questions to the should say that... .
end.
I hope my lecture I must emphasize That’s about all
won’t be a long … there is to it.
shot2.
At this point we Thank you for
must consider ... . listening.
To go back to my Now if there are
earlier point ... . any questions, I’ll
be happy to answer
them.
                                                            
1
Чтобы усилить доводы.
2
Не займет много времени.
– 25 –
B. Comment on the presentation given by your colleague. Make use of
the following points and helpful phrases. Do your best so as not to
offend the speaker and to show the positive sides of the presentation
rather than criticize it:
Timing
 The presentation was a bit too extended(had an appropriate timing).
 to follow the timeline
Lay-out of the presentation
 to be well (badly, appropriately, ... etc.) – structured, – planned
 to be clearly organized into introduction, the main part, conclusion
Manner of presentation
 to speak distinctly and clearly (slowly, monotonously, ... etc.)
 to have a good/poor/(in)sufficient eye-to-eye contact with target listeners
 to encourage feedback
 as to the speaker’s poise , he/she was quite self-possessed throughout the
lecture
General language ability
 to have mispronouncings (slips of the tongue, grammatical errors)
 to have a good (poor, adequate, appropriate) command of the language
 to use helpful phrases (active vocabulary) in a full range
 to be (not) up to the mark
Contents of the presentation
 the facts were well-chosen(varied, to the point,...etc.) and helped to hold
attention and interest of the listeners
 to cover the matter fully
 to be (quite) at home in the subject
 to be concise, but to the point
Use of visuals and slide structure
 to find the correct approach to the subject
 to help the audience concentrate on what the lecturer is saying
 the chosen fonts (color, background, graphs) reinforce the logic of the
presentation
– I assume, ... (guess, believe... etc.) / I should admit that ...
– I regret to say, that … .
– I’m afraid I didn’t quite catch ... (what the speaker said / meant ...).
– My impression of the presentation is (un- / hardly / quite) favourable.
– 26 –
1.6 DIALOGUE 1
Read and translate the following dialogue:
Import and Export
A. Pleased to meet you, Mr. Bently. Let’s get down to business. You see,
an import/export transaction usually requires a lot of complicated
documentation.
B. True. Unfortunately, I’m not quite at subject. Many different
arrangements have to be made and this can be difficult when one firm
is dealing with another firm on the other side of the world. Needless to
say that there should be a lot of specialists involved.
A. I take your point. Let’s dot the “i”s and cross the “t”s. Firstly, there
should be a shipping agent and/or a freight forwarder (forwarding
agent) who takes responsibility for the documentation and arranges for
the goods to be shipped by air, sea, rail or road. Moreover, these
services may also be carried out by the supplier’s own export
department, if they have the expertise.
B. Oh, definitely. Also there are airlines, shipping lines, railway or road
haulage firms to transport the goods.
A. Sure. We must bear in mind that both the importer’s and exporter’s
banks will be involved in arranging payments if a letter of credit or a
bill of exchange is used.
B. And what about customs officers who may examine the goods, check
import or export licences and charge duty and/or VAT?
A. Yes, of course. At this point we must consider the manufacturer or a
chamber of commerce to issue a Certificate of Origin, if this is
required by the importer’s country.
B. Sorry to butt in, but why don’t you mention an insurance company or
insurance broker to insure goods in transit?
A. Oh, it just escaped my mind ... I should also mention an export credit
insurance company (such as Hermes1 in Germany).
B. Will there be a lawyer if a special contract has to be drawn up?
A. That’s right. This brings me to my next point. You see, many import or
export deals are arranged through an exporter’s agent or distributor
abroad.
B. And what about prices for exports?
A. Prices for exports may be quoted in the buyer’s currency, the seller’s
currency or in a third “hard” currency (e.g. US dollars, euros or yens).
The price quoted always indicates the terms of delivery, which
                                                            
1
Hermes [′ha;miz ]
– 27 –
 conform to the international standard Incoterms. The terms of delivery
depend on the kinds of goods being traded and the countries between
which the trade is taking place.
B. I see ... Surely you’d admit that methods of payment also vary.
A. Fair enough. Let me clarify that for you. Methods of payment may be
on a cash with order basis (or cash deposit with order), on open
account (as in most domestic trade, where the buyer pays the supplier
soon after receiving the goods), by irrevocable letter of credit or by
bill of exchange. Exporters and importers often prefer the security of
payment by confirmed irrevocable letter of credit when dealing with
unknown firms in distant countries.
B. I always thought that trade between countries within a free trade area
and within the European Union is simpler, and many firms pay for
goods by cheque and use their own transport to deliver goods across
frontiers.
A. Er, yes, no special customs documentation is required for trade
between firms in different parts of the EU, but VAT rates vary from
country to country. Well, that’s all I have today for the moment, thank
you for listening.
B. Thank you for clarifying the matter for me.
Task 1. Report the dialogue. Use the following reporting verbs:

 to acknowledge  to try to find out whether

 to admit  to add
 to mean  to emphasize
 to conclude  to remark
 to agree  to offer
 to apologize for something  to suggest that ...
Task 2. Work with a partner. Look at the dialogue and discuss what
A. and B. say about the following subjects.
a. documentation, required by an import/export transaction
b. who takes responsibility for the documentation and arranges for the
goods to be shipped
c. different methods of payment and people arranging them
d. the need for an insurance company or insurance broker
e. the specifics of import or export deals.

– 28 –
Task 3. Say it in English:
• организовывать перевозку грузов по железной дороге
• я не очень разбираюсь в этом вопросе
• страховать транспортируемые товары
• к тому же, в дополнение
• страховое свидетельство
• безотзывный аккредитив
• коносамент
• компания, страхующая экспортное кредитование
• сертификат происхождения товара
• транспортная морская накладная
• расставим точки над «i»
• экспедиционное агентство, организующее перевозки партий грузов
или перерабатывающее экспортно-импортные грузы
• налог на добавленную стоимость в разных странах разный
• железнодорожное или автодорожное агентство
• торгово-промышленная палата
• иметь опыт
• оплата с наличным расчетом при выдаче заказа
• экспедитор, агент по погрузке и отправке товаров
• переводной вексель
• соответствовать принятой в мире международной торговой
терминологии
• взимать таможенную пошлину и/или налог на добавленную
стоимость (НДС)
• доставлять товары за границу
• условия поставки
• указывать цены в твердой валюте «третьей страны»
• таможенник.

– 29 –
Task 4. a) Produce your own dialogue about documents needed in
international trade and the meaning of Incoterms. Make
a full use of the underlined helpful phrases from Dialogue
1 and Supporting Materials:
Supporting materials
Documents needed in international trade (Import and export)
 Bill of Lading  Dangerous Goods Note
 Sea Waybill  Air Waybill
 Shipping Note  Certificate of Insurance
Incoterms 20001
Group 1 – The E Term (Departure)
EXW This price is the Ex-Works cost of the goods. The buyer arranges
collection from the supplier and pays for freight carriage and
insurance.
Group 2 - The F terms (Free, main carriage not paid by the seller)
FCA The Free Carrier price includes all costs to a named point of
loading onto a container. The buyer pays for onward shipment and
insurance.
FAS This price includes all costs to a named port of shipment Free
Alongside Ship. The buyer pays for loading, onward shipment and
insurance.
FOB This price includes all costs of the goods Free On Board a ship (or
aircraft) whose destination is stated in the contract. The buyer pays
for onward shipment and insurance.
Group 3 – The C terms (Main carriage paid by the seller)
CFR This price includes Cost and Freight, but not insurance, to a named
port of destination in the buyer’s country.
CIF This price covers Cost, Insurance and Freight to a named port of
destination in the buyer’s country.
CPT The cost and transportation of the goods, Carriage Paid to a named
destination in the buyer’s country.
CIP The cost and transportation of the goods, Carriage and Insurance
Paid, to a named destination in the buyer’s country.
CIP Carriage and Insurance Paid To a named place of destination.
                                                            
1
The Incoterms rules or International Commercial terms are a series of pre-defined commercial
terms published by the International Chamber of Commerce (ICC) that are widely used in
International commercial transactions. In the prior Incoterms 2000 version, the rules were divided
into four categories, but the 11 pre-defined terms of Incoterms 2010 are subdivided into two
categories based only on method of delivery.
– 30 –
 Group 4 – The D terms (Delivered / Arrival)
DAF The cost, insurance and transportation of the goods Delivered At
Frontier.
DES The cost, insurance and transportation of the goods Delivered Ex-
Ship to the named port of destination.
DEQ The cost, insurance and transportation of the goods, unloaded from
the ship and Delivered Ex-Quay to the named port of destination.
DDU The cost, insurance and transportation of the goods Delivered Duty
Unpaid to the named port of destination.
DDP The cost, insurance and transportation of the goods Delivered Duty
Paid to the named port of destination.
b. Match each group of Incoterms to the four paragraphs. Expand on
them.
Group 1 – The E Term Paragraph _________
Group 2 – The F terms Paragraph _________
Group 3 – The C terms Paragraph _________
Group 4 – The D terms Paragraph _________
A
The seller arranges and pays for the pre-carriage in the country of export.
The goods are delivered to a carrier appointed by the buyer. The buyer
arranges insurance against damage to the goods in transit.
B
In this group the seller arranges and pays for the main contract of carriage.
In some of the terms the seller arranges insurance against damage to the
goods in transit.
C
These terms maximize the seller’s cost and risk, as he has to make the
goods available at the agreed destination. The seller bears the costs and
risks of bringing the goods to the country of destination, and arranges and
pays for insurance against damage to the goods in transit.
D
Under this shipping term the seller makes the goods available for
collection by the buyer at the seller’s own premises. This term involves the
least risk for, and requires the least effort by, the seller, but should not be
used where the buyer cannot carry out export formalities.

– 31 –
c. Analyse the changes in the list of Incoterms. Search the Internet and
make a Power Point presentation to support your dialogues.
Incoterms 20101
Group 1. Any mode of transport
EXW Ex Works (named place of delivery)
FCA Free Carrier (named place of delivery)
CPT Carriage Paid To (named place of destination)
CIP Carriage and Insurance Paid to (named place of destination)
DAT Delivered at Terminal (named terminal at port or place of
destination)
DAP Delivered at Place (named place of destination)
DDP Delivered Duty Paid (named place of destination)
Group 2. Sea and inland waterway transport
FAS Free Alongside Ship (named port of shipment)
FOB Free on Board (named port of shipment)
CFR Cost and Freight (named port of destination)
CIF Cost, Insurance and Freight (named port of destination)

DIALOGUE 2
Read and translate the following dialogue:
Trade Restrictions
A. Judging by what I’ve derived from our lectures, many nations impose
limits on trade. I managed to single out the four main types of trade
restrictions: tariffs, subsidies, quotas and cartels where a tariff is a
tax placed on imported goods.
B. As a matter of fact, tariffs are of two kinds – revenue and protective.
A revenue tariff raises money for the government. For this reason,
revenue tariffs are generally low so that consumers will continue to
purchase the taxed goods. However, protective tariff taxes an
imported good so that the price becomes as high as, or higher than,
the similar domestic manufactured product.
                                                            
1
The eighth published set of pre-defined terms, Incoterms 2010 defines 11 rules, reducing the 13
used in Incoterms 2000 by introducing two new rules (“Delivered at Terminal”, DAT; “Delivered at
Place”, DAP) that replace four rules of the prior version (“Delivered at Frontier”, DAF; “Delivered
Ex Ship”, DES; “Delivered Ex Quay”, DEQ; “Delivered Duty Unpaid”, DDU).
– 32 –
A. I take your point. Protective tariffs make imported products more
expensive and encourage people to buy goods produced in their own
country.
B. Definitely. For example, if the cost of producing a pair of shoes is
$20 in the United States and $10 in Italy, Italian shoes could be
cheaper. Americans then would buy Italian shoes to save money. To
encourage domestic shoe purchase, the federal government could
levy a tariff of $15 per pair on imported Italian shoes.
A. Then a subsidy can be thought of as a tariff in reverse. Instead of
taxing the foreign product, the government gives a subsidy to the
industry that is suffering from foreign competition. In the shoe
example, the government would grant a subsidy to the nation’s shoe
industry. Shoe manufacturers could then meet some of their
production costs through the subsidy and charge less than foreign
producers for their products.
B. Indeed. Still, I suppose a nation can limit the amount of goods that
can be imported into the country.
A. It’s called a quota. A quota on shoes, for example, might limit shoe
imports to 100 million pairs a year. If Americans buy 500 million
pairs of shoes each year, most of the market will go to American
producers. Usually, quotas are imposed when tariffs and subsidies
have failed to protect domestic industries from foreign competition.
B. But I know that sometimes a group of companies or countries band
together to restrict competition. May be that is called “cornering the
market”?
A. Ask me another1. Wait though. I believe you are wrong. It’s called a
cartel. The members of the cartel agree to limit the supply and
control the price of a particular good. Members meet regularly to
decide how much to sell and how much to charge for their product.
B. At all events, I am all for tariffs, because, to my mind, they provide
domestic job protection and aid industrial development. I also
believe that tariffs are important to the national defence.
A. It may well be true. Sometimes tariffs and subsidies are applied on a
regional rather than a national basis. For example, in the late 1950s
six European nations – Belgium, France, Italy, Luxembourg, the
Netherlands, and West Germany – formed the European Economic
Community (EEC), usually called the Common Market. Later,
                                                            
1
Вот уж не знаю.
– 33 –
 Denmark, Great Britain, Greece, and Ireland also joined. The EEC
established common tariffs against products from non-EEC nations.
At the same time, the countries eliminated tariffs among themselves.
B. What is more, specialisation and trade result in interdependence.
Many nations do not want to depend on other countries for products
necessary to national defence, such as oil and steel.
A. Still I don’t doubt that all trade restrictions limit world trade,
reducing the total number of goods and services produced. Trade
restrictions also raise prices.
B. By the way, does GATT have anything to do with the problem?
A. Pardon?
B. I mean the International General Agreement on Tariffs and Trade .
A. Oh, yes. As far as I know, it encompassed 22 countries in 1947, later
the group expanded to somewhat about 100 countries. Unfortunately,
I am not quite at subject.
B. I know that signers of the GATT met periodically in an effort to
lower tariffs and settle trade disputes. The GATT also restricted
member countries from banning or limiting imports from the other
participants. In 1995 the World Trade Organization became the
successor to it.
A. I am overwhelmed1. We have got a real recital of facts and surmise.
B. Sure. Let’s call it a day2.
Task 1. Report the dialogue. Use the following reporting verbs:
 to mention  to explain that
 to surmise that  to find out if/whether
 to certify that  to guess if/whether
 to single out  to indicate that
 to estimate that  to confess that
 to state  to recommend
Task 2. Work with a partner. Look at the dialogue and discuss what
A. and B. say about the following subjects.
a. tariffs
b. subsidies
c. quotas
d. cartels
e. GATT and EEC
                                                            
1
Сдаюсь.
2
Давайте на этом остановимся.
– 34 –
Task 3. Say it in English:
 поощрять приобретение чего-либо (обуви) на внутреннем рынке
 фискальный тариф, фискальные пошлины
 налог, которым облагают ввозимые в страну товары на основе их
стоимости или количества, – инструмент государственной экономи-
ческой политики (например, для защиты внутреннего рынка)
 обеспечить занятость на внутреннем рынке труда
 протекционистский тариф
 собирать/занимать/добывать/получать деньги
 облагать тарифом в размере ... долларов с единицы какого-либо
товара
 покрыть производственные расходы с помощью субсидии
 соглашение между производителями или потребителями одноимен-
ной продукции, предусматривающее взаимные обязательства по со-
блюдению и поддержанию устанавливаемых цен на соответству-
ющие виды продукции, согласованных квот производства, разгра-
ничение основных районов сбыта и т.п.
 объединиться для обуздания конкуренции
 применять на какой-либо основе
 взыскивать/начислять за что-либо меньше, чем зарубежные произ-
водители
 в любом случае, я за ... .
 вводить норму, долю, квоту касательно чего-либо
 уменьшить общее количество производимых товаров и услуг
 судя по тому, что я извлек из (содержания) лекции ... .
 выделить основные виды чего-либо
 предоставлять субсидию
 получить в результате взаимную зависимость
 я понимаю, что вы имеете в виду.
 ограничить поставку и контролировать цену
 страдать от конкуренции (товаров) из-за рубежа
 наоборот
 взаимно отменить тарифы/ налоги
 запретить импорт
 вот уж не знаю
 заключать в себе что-либо
 подробное изложение фактов и предположений
 облагать товар налогом или пошлиной.

– 35 –
Task 4. Search the Internet to find further information about the
WTO and Russia’s membership in it for your Power point
presentations.
Task 5. Use Supporting Materials to continue the dialogue about
economic globalization. Make use of helpful phrases from
Dialogue 2:
Supporting Materials
Economic globalization refers to the increasing interdependence of
world economies as a result of the growing scale of cross-border trade of
commodities and services, flow of international capital and wide and rapid
spread of technologies. The rapid growing significance of information in
all types of productive activities and marketization are the two major
driving forces for economic globalization. The advancement of science
and technologies has greatly reduced the cost of transportation and
communication, making economic globalization possible. Today’s ocean
shipping cost is only a half of that in the year 1930, the current airfreight
1/6, and telecommunication cost 1%. This kind of ‘time and space
compression effect’ of technological advancement greatly reduced the cost
of international trade and investment, thus making it possible to organize
and coordinate global production. For example, Ford’s Focus car is
designed in England, its gearing system produced in Germany, pump in
the USA, and engine in Spain. It is exactly the technological advancement
that has made this type of global production possible. Moreover the
development of the networking-based economy has given birth to a large
group of shadow enterprises, making the concept of national boundaries
and distance for certain economic activities meaningless. Under the
framework of GATT and WTO, many countries have gradually cut down
their tariff and non-tariff barriers, more and more countries open up their
current accounts and capital accounts. All of these have greatly stimulated
the development of trade and investment.
Multinational corporations (MNCs) have become the main carriers of
economic globalization. They are globally organizing production and
allocating resources according to the principle of profit maximization. And
their global expansions are reshaping macroeconomic mechanisms of the
operation of the world economies. This type of cross-border economic
activities within same enterprises has posed a challenge for the traditional
international trade and investment theories. Globalization of the financial
sector has become the most rapidly developing and most influential aspect
of economic globalization. International finance came into being to serve
the needs of international trade and investment activities.
– 36 –
1.7 READING FOR CROSS-CULTURAL ASSOCIATIONS
a. Read the texts below.
A
Viewed as an employer and wealth creator, Britain’s financial system
is the biggest part of the British economy. Incredibly, it has overtaken
industry as the country’s leading exporter (or earner of foreign currency).
And the City has become so big that it dominates the economy of southern
England: property prices, services ranging from restaurants to car dealers,
and even education depend on the City’s fortunes. More international
telephone calls are made to and from London than any other city in the
world. More airline passengers pass through London than any other place.
Helped by increasing popularity of English as an international language
(English is the most widely learnt second language) and London’s position
mid-way between the Asian and American time zones, the British financial
institutions seem more dynamic than ever.
But some big clouds loom on the horizon. One is technology.
Electronic communications can cut out many of the stages through which
business used to pass.
The other big cloud is Economic and Monetary Union, the European
Union’s single currency. The point of EMU is to make business between
the EU members easier and to weld the still disparate EU members into the
world’s biggest single economy, overtaking the United States. The
assumption is that a single currency will intensify competition between
financial institutions in different countries and that the consumer will
benefit. British financial institutions ought to flourish under EMU, backed
as they are by the City and Europe’s most sophisticated financial system.
But it is uncertain whether or when Britain will join EMU. Some
experts fear that staying outside the single currency will cut the country off
from its European neighbours. European exchanges are banding together
to take advantage of EMU and to compete with London. The City’s
international status could suffer, and the ability of the country’s financial
institutions to meet the needs of ordinary British people might also
deteriorate. Other experts believe that Britain’s financial institutions can
survive and even prosper outside EMU.
– 37 –
B
With its open economy, the Netherlands was among the original
founders of the European Union. Ever since, it has advocated further
integration, although in recent years since Euro-scepticism has set in just
like elsewhere, but that seems to be related to the functioning of the EU
rather than to the idea as such. People from other countries cannot fail to
notice this international attitude.
Think globally, act locally. Even smaller Dutch firms are quite aware
of the necessity of adapting their products, their advertising and the
business behaviour of their representatives in order to meet the standards
and the requirements of local markets. In response to these needs,
governmental and business organisations in the Netherlands provide
valuable export advice; culture and language training institutes cater to the
business world; and literature and statistics abound on even the remotest
countries.
The Dutch government is keen to play a global role, supporting
international collaboration not only in the European Union, but also in
NATO and various UN peace missions. At the same time, we shouldn’t
overlook the fact that this country is also the world’s largest arms exporter
and one of the world’s largest importers of tropical hardwoods (which,
being water-resistant, is used both in the construction of housing, boats
and port equipment).
In the rapidly expanding EU, the Netherlands is now merely one of
many small nations (albeit1 one with large economy that has always been a
loyal net-contributor2). In broad outline, this country remains firmly rooted
in the European Union and the world community, with an open eye to all
sides, balancing the commercial interests of the economy with the human
ideas of peace, development and equal opportunities for people
everywhere.
Yet, at the same time, the policy for admitting asylum-seekers has
hardened in recent years. And with the enlargement of the EU toward
Central Europe in 2004, the Netherlands was one of the countries trying to
protect its labour market by keeping out workers from the new member
states for the first two years. Further, European elections result in low
participation. Instead of enthusiasm about a new start for this old
continent, there are concerns about finance, employment and safety close
to home.
                                                            
1
albeit = “all though it be (that)” – хотя (и). He was considered as a tough albeit fair boss. – Его
считали жестким, хотя и справедливым, боссом. Syn: even though , even if , although.
2
Нетто-кредитор.
– 38 –
b. Draw a parallel between the United Kingdom, the Netherlands and
the Russian Federation to cover the points in the following chart.
Surf the Internet for keywords EU, EMU, European exchanges, the
City, Eurozone, Maastricht Treaty.
Characteristics the United the the Russian
Kingdom Netherlands Federation
National financial sector

Role in the European

financial sector

Attitude to the EU and EMU

Factors of economic growth

Priorities in advantages and

disadvantages of
collaboration between
European nations

– 39 –
1.8 CASE STUDY & ROLE PLAY
Case 1

“Coburn Tool Corporation, an American manufacturer of large and

small machine tools and parts, gears, valves, and bearings, was a major
supplier to industries and companies world-wide. Because of the rise of
the U.S. dollar on exchange markets and serious financial crises in many
of the countries in which Coburn did business, sales, particularly to Latin
America, began to decline.
A major market for Coburn’s products had until recently been Brazil.
For instance, in 1980 sales to that country’s industries were $640,000; but
by 1983 sales had declined to just $183,000.
This serious problem seemed to have little solution because of
Brazil’s chronic credit problems and lack of foreign exchange.
In the fall of 1984, however, a unique proposition was received at
Coburn’s head office near Cleveland, Ohio, from a Brazilian commodities
broker, Companhia Internacional de Comercio, S.A. (CIC). CIC’s offer was
essentially this: in exchange for US $ 400,000 in assorted gears, Coburn
would receive the equivalent in Brazilian shoes, which it could sell in the
American market.  
The advantages of the countertrade proposal cluster around three
subjects: market access, foreign exchange, and pricing. The seller is able
to sell the product at full price and can convert the inventory to an
account receivable. The cash-tight buyer that lacks hard currency is able
to use any cash received for other operating purposes”.

Case Analysis
1.8.1 Develop the following ideas.
1. The lack of foreign exchange is causing problems for Third World
countries. The solution to the problem is often countertrade.
(countertrade/barter (the exchange of goods for goods; a recent
phenomenon in international trade, chronic shortage of foreign exchange
in developing countries, the lack of understanding how desperate many
developing countries are; a worldwide phenomenon; to be concentrated
between Western manufacturing countries and developing countries; to
send highly specialized items – cars, computers, cameras; a middleman
representing a developing country).

– 40 –
2. Coburn Tool Corporation has to decide whether to take the risk of a
barter deal. Overseas Sales Manager’s, John McEnroe’s, first reaction –
finding the proposal ludicrous – changes on further consideration.
(to be worthwhile to accept something; requires a double coincidence of
wants, in order to increase sales; risks involved on both sides; to find
itself with merchandise it cannot sell; to find a way to sell something; to
ensure a return on the sale).
Critical Thinking Tasks
1.8.2 A. Search the Internet for keywords countertrade, barter, offset,
buyback, switch trading, counter purchase. Use the obtained
information in your case analysis.
B. Relate the following chart of advantages and disadvantages of
countertrade to the case under consideration.
Countertrade: Pro & Contra
Foreign currency conservation Uncertain value proposition
Ease of entry into challenging Potentially higher costs and
markets logistical issues
Better capacity utilization Complex negitiations
Higher sales
Increased employment
C. Say how countertrade differs from the traditional method of
trading products between countries. Give reasons why countries
engage in countertrade.
D. Prepare a report on the case. Use the instructions below.
Preparing written reports on a case
The following guidelines will help you write an effective case analysis.
First, in business communications a short report is usually considered
better than a long report. This does not mean that in your report you can
skip key points, but rather that you state relevant points clearly and
concisely. Do not include trivial matters.
Second, the report should be well written. It should be typed and not
contain spelling or grammatical errors. The report you hand in for class
should be equivalent in quality to a report you would write for your boss, a
senior manager of a business company.
A well-written report would contain the following elements:
 Executive summary. This is a concisely written statement, less than one
page, placed at the front of the report. It briefly summarizes the major

– 41 –
 points of the case and your solution. It should describe the major issue,
the proposed solution, and the logic supporting the solution.
 Problem statement. Present the central issue(s) or major problem(s) in
the case here. Do not rehash the facts of the case; assume that anyone
reading the report is familiar with the case.
 Alternatives. Discuss all relevant alternatives. Briefly present the
major arguments for and against each alternative. Be sure to state your
assumptions and the impact of constraints on each alternative.
 Conclusion. Present the analysis and the logic that led you to select a
particular solution. Also discuss the reasons you rejected the other
alternatives.
 Implementation. Outline a plan of action that will lead to effective
implementation of the decision so that the reader can see not only why
you chose a particular alternative but how it will work.
Preparation of an oral case report should include the following:
 Description of the case situation. Present a brief overview of the
situation in the case. Sometimes a teacher will ask a student to start off
the classroom discussion with this overview.
 Problem statement. Describe the major issues or problems in the case.
 Analysis of the key alternatives. Present the results of your analysis of
relevant alternatives in a concise manner. Depending on the type of
analysis, this is sometimes called "running the numbers."
 Conclusion. Briefly describe the logic that led you to choose the
alternative. Summarize why the other alternatives were not chosen.
 Implementation. Present your implementation plan.

1.8.3 Say it in English using the word combinations from both the
Case-study and Role-play sections:
 заработать что-либо в качестве комиссионного вознаграждения
 заняться бартером
 обеспечить прибыль с продажи
 посредник, действующий от лица кого-либо
 нехватка иностранной валюты (валютных ресурсов)
 развивающиеся страны (страны третьего мира)
 разрешение (этой проблемы) маловероятно из-за постоянных
проблем с кредитами
 торговый маклер
 счесть предложение смехотворным
– 42 –
 выслать предварительный заказ
 производить станки и оборудование, разнообразные шестерни,
клапаны и подшипники
 недопонимание
 отказаться от сделки
 зд. быть в отчаянном положении
 сделать что-либо, поразмыслив
 связанный с чем-либо риск
 объем продаж начал падать
 прислать спецификацию какого-либо товара вместе с образцами
 начальник отдела внешних продаж
 перечень (смета, разбивка) того, что кто-либо хочет купить
 учредить торговое представительство
 стоит принять что-либо для того, чтобы сделать что-либо
 акцент в чьих-либо доводах
 передать полномочия посреднику.

Role-Play 1
Situation
Coburn Tool Corporation receives a unique proposition from Companhia
Internacional de Comercio: in exchange for US $ 400,000 in assorted
gears, Coburn would receive the equivalent in Brazilian shoes, which it
could sell in the American market. Coburn’s first reaction was to reject the
deal; indeed, the overseas sales manager, John McEnroe, found the
arrangement almost laughable. On further consideration, however, he
began to think more seriously about the proposition. Four hundred
thousand dollars was a significant amount of money. But what would a
machine tool manufacturer do with shoes? Garcia is experienced at dealing
with Western businessmen and has quick answers to all of McEnroe’s
questions, while the latter is unfamiliar with barter. Garcia mentions
American corporate giants like Citicorp, Sears, GM, so as to show
McEnroe that companies much larger than his own got involved in
countertrade and to make it seem less risky. Garcia makes the proposal
more attractive by telling McEnroe that he can even earn some extra
money through a commission. Garcia is going to send a tentative order for
the gears, making McEnroe show that he has a firm offer for a large
amount of money.
– 43 –
Task
Act out a series of telephone conversations between John McEnroe,
Overseas Sales Manager, Coburn Tool Corp. and Jose Garcia, Presi-
dent, Companhia Internacional de Comercio. After the first conversa-
tion Mr. McEnroe consults his colleague Alain Malone. Rose Ward,
Mr. McEnroe’s secretary, receives telephone calls and does secretarial
jobs.
John McEnroe: Your first reaction was to reject the deal; indeed, you
found the arrangement almost laughable. On second thought you and
your associates decided you might as well investigate it. You are of
course happy to sell $400,000 worth of gears, but you do not know
what to do with shoes. Garcia’s idea of setting up a trading
subsidiary sounds strange and you are afraid your boss will only
laugh you out of office. But then you try to find out how the deal will
work and what would happen if you are unable to sell the shoes. You
don’t know what a good shoe is and what a good price is. The whole
business sounds very risky. But the hint about an extra profit makes
the idea more attractive and you ask Garcia to let you talk to some
commodity specialists and to your associates. If they feel you can
move the shoes, you might consider it. It’s natural that Coburn will
be reluctant to ship $400,000 worth of gears without first having
some assurance they will actually get paid. So you ask Garcia to send
you the specs (specifications) on the shoes together with some
samples; also a breakdown on what gears they want to purchase.
Make use of the helpful phrases:
 I must confess ... .
 At first ... seemed completely out of the question ... .
 Obviously, we’re happy to ..., but why in the world are we to do with ...?
 I can’t see us doing it. What I can see is ... .
 Well, that’s another matter.
 Hmm. But suppose ... .
 I know next to nothing about ... .
 At the moment that seems little more than wishful thinking1 … .
                                                            
1
Попытка принять желаемое за действительное.
– 44 –
 Well, I obviously can’t make a decision now. Let me ... .
 Do this for me – ... . Then we can talk some more.
 Best, though, not to laugh too loud1.
Garcia: You focus your interlocutor’s attention on the fact that
countertrade is one way Brazil has managed to cope with its foreign
exchange problems. In your opinion Coburn can arrange to transfer
title to a middleman, i.e. an importer in the U.S., or follow the
example of Sears, G.M. or Citicorp and set up a trading subsidiary of
their own. Then you explain to John McEnroe how the deal will
work: Coburn Tool Corporation sends CIC $400,000 in parts and
CIC sends them the title for $400,000 in shoes. When Coburn sells
the shoes, CIC will deliver them wherever they want and Coburn
won’t have to house them. The shoes are excellent and the price is
extremely low. A commodities specialist should be able to evaluate
the product and sell it. But the point in your reasoning is that John
McEnroe can make an extra profit on this deal, taking a small
commission on the sale of the shoes, say 2–3%. You will get the
shoes off to Coburn right away and also send a tentative order for
their gears.
Make use of the helpful phrases:
 My name is … . I’d like to speak to Mr. … , please.
 I’d like to make an appointment to see Mr. … sometime next week.
 I’m sure it must have seemed unusual to you at first, but ... .
 There are a couple of actions you can take, say ... .
 That’s usually the first reaction.
 It’s really fairly simple.
 That shouldn’t be a problem.
 That’s where the specialist comes in. If you ... .
 Thanks for considering this proposal.
 I feel sure we can work something out.
Alain Malone: You chief wants to find out how the deal will work and
what would happen if you are unable to sell the shoes. You are young
and advantageous and forward-looking. That’s why you do not reject
the offer and make a preliminary desk research. Countertrade is
                                                            
1
Хорошо смеется тот, кто смеется последним. 

– 45 –
 actually a form of currency exchange. It may even be considered as a
form of bartering between a developed country and developing
countries. Such trading entails a high level of risk and requires a thorough
understanding of markets in all countries involved. You are quite aware
that it is not a method of trading that businesses in developed countries
favour. Still, that may be the only way to trade with a country that has few
dollars. You suggest that you refer to a commodities specialist so that he
could evaluate the product and help sell it.
Make use of the helpful phrases:
 Let’s be clear first of all over the general problems.
 However, one or two comments have some validity.
 It makes sense for us to … .
 As things stand, … .
 After all, … .
 It’s beyond doubt that … .
 It’s my perception that … .
 He who hesitates is lost.
 That would be the best idea under the circumstances.
Rose Ward: When you answer the phone, your response depends on two
things:
If the call you receive is a direct incoming call you state the name of
your company:
“Coburn Tool Corporation’s. Good morning.”
If the call you receive is via a private exchange switchboard you state
your name and department
“Head office. Miss Ward speaking”, or “Miss Ward. Head office” .
You should not just say “Hullo”. This causes confusion, does not help
the caller, and wastes time.
Make use of the helpful phrases:
 I’m afraid Mr. Mis not here at the moment. Can I help you, or would
you like to speak to someone else?
 And your name? I didn’t hear it properly the first time.
 Will you, please, spell your name?
 Would you like him to phone you when he comes back to the office?
 Would you like to phone again later?
 Would you like to leave a message?
 I’ll pass the message on to Mr. … .
– 46 –
 I’ll just check Mr. M’s diary, and see if I can arrange an appointment
for you.
 Would … (Wednesday afternoon, 2.30) be convenient?
 I’ll make a note of that.
 Would you like me to confirm the appointment?
 Just a moment. I won’t be long.
 Mr. M is on the other line at the moment. Would you like him to phone
you back later?
 I have Mr.G of … (the name of the company) on the line. He wants to
speak to …
 All right. You are trough. (Соединяю.)
 Fine. I”ll do that.
Making a Decision
In coming to a decision, consider the following points:
 Risks involved in countertrade
 The advantages of the deal under consideration
What other factors should be discussed?

Your decision:

– 47 –
 Appendix
Complete the secretary’s message form for the telephone conversation:
MESSAGE FORM
For …………………………………………………………………………
From ……………………………………………………………………….
Of ………………………………………………………………………….
Tel No. …………………………………………………………………….

came to see you sent telex message urgent please ring him / her
telephoned appointment to see you telex back will phone later
cabled wants to see you will write will come again

Message
………………………………………………………………………………
………………………………………………………………………………
………………………………………………………………………………
………………………………………………………………………………

Date …………………………………… Time

……………………………….
Received by ………………………………………………………………….

Note:
In international calls, the spelling of names often causes difficulty.
Secretaries use the official Post Office alphabetic code, and if you are
spelling a word to an English-speaking person on the phone, they will
understand you if you use this code.
The official Post Office alphabetical code is:
A for Andrew H for Harry O for Oliver V for Victory
B for Benjamin I for Isaac P for Peter W for William
C for Charlie J for Jack Q for Queenie X for X-ray
D for David K for King R for Robert Y for Yellow
E for Edward L for Lucy S for Sugar Z for Zebra
F for Frederick M for Mary T for Tommy
G for George N for Nellie U for Uncle

– 48 –
 Case 2

“During 1982, the dollar rose against other major currencies to its
highest level since the beginning of floating exchange rates in 1973. The
strength of the dollar provided some benefits to the economy by reducing
import prices and controlling inflation. On the other hand the strong dollar
caused severe problems by decreasing the cost competitiveness of United
States exports. The rise of the dollar was associated with a large rise in the
production costs of United States firms relative to foreign competitors.
This rise in relative costs has at least temporarily reduced the international
competitiveness of United States industry dramatically.
Imported Japanese cars accounted for almost one-forth of all cars sold
in the United States in the early 80s. During the recession from 1979
through 1982, sales of American cars declined. In 1982, sales of
domestically produced cars reached a 24-year low of 5.7 million;
unemployment in the American auto industry exceeded 20 per cent. As a
result of declining sales, the United States asked Japanese car
manufacturers to limit their exports to the United States. In April 1981, the
Japanese agreed to a voluntary quota of 1.7 million cars per year for three
years. In April 1984, the agreement was extended a fourth year and the
quota increased to 1.85 million cars. In 1985, the agreement ended.
Japanese automakers immediately announced their intention to increase
car exports to the United States.
Trade restrictions on Japanese cars have been debated in the United
States for over 10 years”.

Case Analysis
1.8.4 Develop the following ideas:
1. In general, nations realize that specialisation and trade benefit everyone.
(the advantages of global trade; the production of more goods; the
improvement of living standards in the trading countries; the increased
operating efficiency of the world economy).
2. In the 1980s the strong dollar caused severe problems for the US
economy.
(to rise against other major currencies; floating exchange rates; to
provide benefits to somebody/something. by doing something.; to reduce
import prices; to decrease the cost competitiveness of something.; to
– 49 –
 control inflation; a rise in the production costs: to reduce the
competitiveness of something).
3. Tariffs and quotas can stop foreign competitors from putting established
domestic industries out of business.
(to use dumping – selling a product in a foreign country at a price lower
than the cost in the home market; to gain an unfair share of a nation’s
markets; to be forced out of business; domestic manufacturer; the
foreign supplier; to be free to raise prices).
4. Trade restrictions also may protect an industry for which the country
does not have an advantage.
(the necessity to produce the best product at the lower price; a trade
deficit to be inefficient; to become uncompetitive in world markets; the
imbalance in trade with Japan).
1.8.5 Say it in English:
 плавающий валютный курс, уровень которого определяется на
рынке под воздействием спроса и предложения
 возрасти по сравнению с другими валютами
 добровольно согласиться на количественные ограничения на
импорт / экспорт товара в объеме ... в год
 быть продленным еще на год
 во время экономического спада
 понизить стоимостную(ценовую) конкурентоспособность экспорта
 практиковать демпинг (предлагать большое количество товара на
рынке по низким ценам)
 достичь самого низкого за последние 24 года уровня в 5,7 млн
 составлять почти четверть чего-либо
 быть вытесненным из бизнеса.
Critical Thinking Tasks
1.8.6 A. Find examples that show how trade restrictions affect
multinational corporations.
B. In and around your house look for any major items not made
in the Russian Federation. Explain why these items, rather
than their Russian-made counterparts, were purchased.
C. Explain how the European Economic Community (WTO,
NAFTA, etc. … ) influences trade around the world.
D. Prepare a report on the case.

– 50 –
Role-Play 2
Situation
Take part in a TV panel discussion programme on trade restrictions on
Japanese cars. A TV commentator interviews representatives of a
government panel and an impartial panel. Study the arguments opponents
used to support their positions. Douglas Frazer, president emeritus1 of the
United Auto Workers and Reubin Askew, United States special
representative for trade negotiations between 1971 and 1981, disagree on
limiting imports of Japanese cars.
Barry Sting, a popular TV commentator. You are a well-known showman.
You organised a panel discussion programme on TV. Several
members of the public are invited to give their opinions. The
questions for discussion were sent in by the viewers. Authors of the
most interesting questions were invited to the studio. The chairperson
(you) reads out the questions and directs the panel. Open the
discussion by describing the members of the panel. Elect a buzz
group – a small group of 3–5 persons to work out and note down all
possible arguments and opinions in favour or against them. A buzz
group will also present a summary of the discussion at the end of the
programme. Mind that interviewing people involves asking for
questions and expressing personal opinions. Open-ended-questions
should prevail over close ones (requiring “yes” or “no” answers). Be
polite yet firm.
Make use of the helpful phrases:
 My function is to act as presiding officer and to introduce those who …
 May I introduce Mr. … who is going to tell us about …
 All right. Who will start the ball rolling?2
 Let’s get this right from the start …
 What’s your alternative proposal?
 How / What do you feel (about) … ?
 Do you mind my asking … ?
 Might I put it like that?
 Could you be more specific, please and tell us why ...
 What exactly do you mean by … ?
 Any other questions? No? Thank you very much.
                                                            
1
Почетный президент.
2
Кто начнет?

– 51 –
Douglas Frazer thinks the United States government should pressure the
Japanese to build cars here in order to save jobs for United States
workers. Although Frazer supports free trade in principle, he thinks
that free trade no longer operates fairly. The Japanese impose many
subtle restrictions on trade. The United States open market policy has
worked against the job security of the United States auto worker.
Frazer acknowledges that United States car makers share part of the
blame for the flood of Japanese imports. United States companies
continued to manufacture more profitable large cars too long,
neglecting the small car market. Frazer fears that if some restraint is
not put on the Japanese, the flood of imports will increase until the
Japanese have exhausted their capacity to export cars. Frazer claims
that he does not approve of trade restrictions that limit consumer
choices. Frazer would, in certain cases, however, recommend either a
marketing agreement to limit imports or legislation requiring that
Japanese car manufacturers whose sales volume in the United States is
high use numerous parts made in the United States. If such measures
were not successful, Frazer would support tariffs or quotas. As layoffs
in the three big United States companies continue, Frazer thinks the
time has come for the administration to get tough. If the United States
administration would pressure the Japanese companies, it would be a
step in the right direction.
Make use of the helpful phrases:
 It’s hardly necessary for me to say that I consider it a very great
honour to be asked to occupy this platform for a few moments.
 ... to say nothing of ...
 There’s another matter I’d like to bring up ... .
 The general feeling is that ... 1
 There’s one more thing we’d like to consider.
 Let’s get on2.
 May I have a say?3
 That’s of course, a big problem, but soluble.
Reubin Askew expresses concern over the high levels of unemployment
in the United States automobile industry. Unlike Frazer, he is not in
favour of imposing any form of import restrictions. Askew believes
                                                            
1
По общему мнению … .
2
Давайте пойдем дальше … .
3
Можно мне высказаться?
– 52 –
 that such restrictions would have an adverse effect on the United
States economy. Askew believes that the number of jobs created by
import restrictions would be very small, whereas the costs of even
temporary limits on imported cars would be very high. Askew cites
the council of Economic Advisers’ estimate that every job gained by
import restraint would add about $ 100,000 in costs to the consumer.
Askew foresees a gradual recovery of the United States automobile
industry as manufacturers become responsive to public demands for
smaller, more fuel-efficient cars. He points to one study estimating
that the imported share of the car market could be cut from 26
percent to 10 percent within a decade. Askew thinks that the
Japanese are afraid the United States automobile industry will regain
its previous market share. Therefore, the Japanese are reluctant to
invest in car production in this country. In addition to government
pressure on the Japanese to invest in the US, Askew points to
government efforts to get the Japanese to open up their market.
Although the Japanese have no tariffs on cars, they do impose a 6 to
8 percent tariff on car parts. The Japanese also require that imported
cars be individually tested. The United States government is making
some progress in persuading the Japanese to remove these trade
restraints.
Make use of the helpful phrases:
 I am deeply honoured by the invitation to address you this evening.
 It’s not as simple as all that.
 Shall we go point by point?
 Considering all this ... .
 I know for a fact that ... .
 We can hardly ignore it.
 I think we’ll have to look into the matter again.
 I wish I could give you a reply now, but ... .
 Let’s take a closer look at it.
Martin Feldstein, Chairman of the Council of Economic Advisers:
Concern over the international competitiveness of the USA is high.
You attribute poor performance to two courses – failures of
management and the support given to foreign businesses by their
governments. Contributing to the view of declining competitiveness
is the United States deficit in merchandise trade, especially the
imbalance in trade with Japan.
– 53 –
Make use of the helpful phrases:
 I deeply appreciate the privilege of participating in a programme, which
in so short a time has grown into an influential and strong panel.
 Most strikingly … .
 As a matter of fact ... .
 At first glance, … .
 From these I may conclude that …
TV-viewer – 1 – When D. Frazer mentioned that United States companies
continued to manufacture more profitable large cars too long,
neglecting the small car market, you remark that, as United States
consumers began to buy smaller cars, Japanese manufacturers met
their needs. You are deeply dissatisfied that the Japanese got an
exclusive hold on the small-car market. You totally agree with Frazer
who fears that if some restraint is not put on the Japanese, the flood
of imports will increase until the Japanese have exhausted their
capacity to export cars.
Make use of the helpful phrases:
 This is really a blot on the landscape.
 All this suggests that, … .
 In short, … .
 Yet, for all evidence to the contrary, … .
TV-viewer – 2 – When Frazer expresses fear that the flood of imports will
increase until the Japanese have exhausted their capacity to export
cars, you support his view by saying that since consumers tend to
stay with a car if they are satisfied with its performance, the United
States automobile industry could suffer permanent damage.
Make use of the helpful phrases:
 It’s beyond doubt that … .
 Best, though, not to laugh too loud.
 After all, … .
 Wait till it is night before saying it has been a fine day. (French proverb)
TV-viewer – 3 as Frazer himself does not approve of trade restrictions
that limit consumer choices. He asserts that the United States
automobile industry needs the competition and discipline that the
European and Japanese manufacturers provide. He refers to recent
studies that suggest that between sixty and fifty per cent of the gains
– 54 –
 in productivity made in the West in the last half-century spring from
better trained minds, from more research, and more systematic use of
the economy’s brain power.
Make use of the helpful phrases:
 At the moment it seems little more than wishful thinking.
 As a matter of fact ... .
 Most strikingly, … .
 For the most part … .
TV-viewer – 4 agrees with Frazer that the time has come for the
administration to get tough. Other industrialised countries have asked
the Japanese to behave in a responsible manner, and the Japanese
have responded. The speaker expresses concern over the
international competitiveness of the United States. In his opinion
United States business has steadily lost ground in the international
marketplace.
Make use of the helpful phrases:
 It makes sense(for somebody to do something).
 The approach has plenty of blots in its record.
 At the same time, however, … .
 To make a long story short, … .
TV-viewer – 5 approves of TV-view-4’s opinion and is also in favour of
Askew’s idea that the Japanese are afraid the United States
automobile industry will regain its previous market share. He thinks
that as United States car companies become more competitive,
foreign companies will find it harder to sell their cars in this country.
Make use of the helpful phrases:
 What I am saying is this: ...
 In some ways, … .
 It doesn’t quite wash1.
 Owing to the fact that … .
TV-viewer – 6 supports Askew’s idea that import restrictions would have
an adverse effect on the United States economy. You felt sure that
limiting the number of imported subcompact cars would force
consumers to either buy larger, less efficient cars or postpone buying
                                                            
1
Это не совсем срабатывает.

– 55 –
 until smaller cars become available. The high cost to the consumer
would increase inflation. The use of larger cars also would raise
gasoline consumption.
Make use of the helpful phrases:
 It goes without saying that … .
 If you permit me … .
 This casts the problem in a different light.
 To crown it all, … .
 Let’s not monkey with a buzz-saw 1
TV-viewer – 7 believes, however, that foreign automobile manufacturers
have a responsibility to invest here. He hopes that the government
will continue to press the Japanese to make investments in this
country.
Make use of the helpful phrases:
 The situation reminds me of the proverb: “ You cannot climb the
ladder of success with your hands in your pockets”.
 In some ways, …
 Still another saying implies that “You must spend money, if you wish
to make money”.
Making a Decision

In coming to a decision, consider the following points:

 The advantages of trade restrictions.
 The pitfalls of imposing limits on exports or imports.

What other factors should be discussed?

Your decision:

                                                            
1
Шутить или играть с огнем.

– 56 –
1.9 GRAMMAR BACK UP: The Infinitive
ANTICIPATION
Task 1
Translate the sentences into Russian paying attention to the function
of the infinitive.
The infinitive as a subject
1. To hi-jack a lorry with a valuable load of cigarettes was the gang’s
objective.
2. It was impossible to repair the car since it was a complete write-off, a
total wreck.
3. To raise the large amount of money was his main ambition.
4. It was impossible to salvage the lot of office furniture because a great
number of items were badly damaged and had to be written off.
The infinitive as part of a predicate.
1. Peter’s first proceeding was to go to the Moorland Valley, have a look
and give an opinion of the damage.
2. Ambrose Harper, the Chairman of “Harper and Grant Ltd”, continues
to attend the board meetings and keep an eye on the business.
3. Although the USA is a major producer of sugar it continues to import
this product because the nation consumes more than it can produce.
4. A single currency may raise competition between financial institutions.
The infinitive as an attribute.
1. W. Buckhurst was a person to receive a telephone call from the police
in Carlisle.
2. The suppliers informed the customers that they had not had time to
forward the shipping documents yet.
3. The adjusters were the last (first) to come.
4. Producing some commodities more efficiently than other producers and
selling them at a lower cost than other sellers is a way to derive a
comparative advantage.
The infinitive as an object
1. Drivers were not allowed to give lifts in the vehicle to any person not
being an employee of the company since it was a serious offence
against company regulations.
2. Elizabeth had learnt to feel at once whether the customer was a
valuable one.
3. His boss had ordered the agent to return the cheque immediately.
– 57 –
 The infinitive as part of a complex object.
1. I never saw you act this way before.
2. Peter Wiles instructed Christopher Thorn to go up to the Moorland
Valley and inspect the damaged lot of office furniture.
3. The Managing Director ordered the secretary to refer to the previous
payment instructions dated 25th of January.
4. The underwriters want the firm of adjusters to assess the damage.
5. The beneficiary made the bank issue him a draft for $ 5000.
The infinitive as an adverbial modifier:
a) of purpose.
1. To be reimbursed, the prudent exporter bought insurance for his
cargoe’s voyage.
2. Thorn went to the Moorland Valley in order to investigate the damage
to the load.
3. To put in a claim to the insurance company, the injured party should
take out a policy first.
4. To have a favourable balance of trade, nations should export more than
they import.
b) of result.
1. Mr. Roberts was experienced enough to investigate the damage to the
load which the lorry was carrying.
2. Peter Wiles was too busy to go up to the Moorland Valley.
3. The exporter was prudent enough to take out an all-risks policy with a
syndicate of Lloyds, a leading exporter of this service.
The infinitive as parenthesis1.
1. To begin with, the prudent exporter should purchase insurance for his
cargoe’s voyage.
2. To tell the truth, Harper & Grant insurance brokers had arranged a
blanket insurance with a syndicate of Lloyds underwriters.
3. To cut a long story short, he summons his nephew Peter, the
Production Manager, to talk things over.

Note. Mind the following structures:

1. Why not ask for another quotation?
2. We cannot but meet the delivery terms.

                                                            
1
Вводное слово/предложение; парентеза.
– 58 –
Task 2.
Familiarize yourself with the text and circle out the infinitives. Note
different forms of the infinitives. Translate the text into Russian.
Some weeks ago a lorry carrying Harper & Grant’s goods was hi-
jacked on the road. Now there is a further development of this which
concerns the insurance. To be on the safe side, every firm insures itself
against loss or damage to its property. Harper & Grant’s insurance brokers
had arranged a blanket insurance with a syndicate of Lloyds underwriters.
Blanket insurance means insurance which covers everything, a
comprehensive policy. Lloyds is a huge insurance organization in London,
grouped in syndicates. The underwriters employ a firm of adjusters to
assess or value the loss or damage. The sum they give will not usually be
as much as the full insured value of the goods or property. They will take
into account, among other things, the depreciated value: for example, the
value of the lorry has gone down, depreciated, because it is two years old.
Harper & Grant have to make a statement at the end of an accounting
period (say once a month or once a quarter) of the total value of goods.
When the lorry was found, so to speak, abandoned, with its spoiled load of
office furniture, the adjusters came in. However, in this case the lorry is a
write-off, a total wreck and impossible to repair. But this does not
concern Harper & Grant, because the lorry belonged to Andersons, the
transport company from whom they hire vehicles. But the load of office
furniture does concern them. They have already had to replace the load,
which was wanted urgently in Scotland.
When a company, or a person, takes out an insurance policy it is, to
say the least, an all-risks policy, that is, it insures the goods or property
against almost anything that could happen. But most insurance companies
put in some exceptions, like outbreak of war or Act of God (something out
of ordinary which cannot be considered a normal risk). When an accident
or robbery takes place the injured party puts in a claim to the insurance
company. If the insurance company agrees to pay it is said to meet the
claim. Notice, first you take out a policy, then you put in a claim, and the
insurance company, you hope, agrees to meet the claim.

– 59 –
PRACTICE
Ask yourself these questions when checking the infinitives.
1. Is the verb followed by a full or bare Infinitive?
We often use the base form of a verb (go) as an infinitive. We call this
form the bare infinitive because we use it without to. It should be
distinguished from the to-infinitive, where we always use to in front of the
base form of the verb (to go). The most common use of the bare infinitive
is after modal verbs (He may/can/must go).
Exercise 1
Insert to before the infinitive where required. Translate the sentences
into Russian.
1. … succeed a corporation must … pay stockholders regular dividends.
2. Where would you ... like to have your goods delivered?
3. You needn’t ... say anything, just nod your head and the claim will ...
be met.
4. Does the manager need ... make decisions that maximize the returns?
5. A number of the problems need ... be solved before any recovery can
... be achieved.
6. The insurance company ought ... be able to meet your claim.
7. They ought ... have asked my advice in order ... avoid this disastrous
mistake.
8. Many different arrangements have ... be made when nations trade with
each other.
9. He appeared ... have plenty of money, which was said ... have been
gained in Latin America.
10. ”Harper and Grant Ltd“ was one of the first companies ... open up a
new market in Abraca.
11. Why not ... go up and give us an opinion about the value of the
damaged goods?
12. The view that outside investors take of Britain as a profitable place …
park their money influences decisions about investment.
13. I cannot but ... think that we should cancel our order in this firm.
14. International prices help … coordinate the decisions of consumers and
producers as they interact in world markets.

– 60 –
2. Which verbs are followed by Complex Object?
a. Some transitive verbs are followed by the object (a noun or pronoun in
the objective case) with an infinitive attached to it:
Peter wanted Christopher (him) to go to the Moorland Valley.
Christopher saw the adjuster (him) assess the damage.
The underwriters made a firm of adjusters (them) value the loss.
b. Complex Object with a to-Infinitive is used after verbs expressing
permission, request, intention, order, liking or disliking such as:
allow, permit, order, command, compel, force, cause, induce,
persuade, request, get, mean, intend, recommend, beg, promise, want,
wish, desire, like, hate, etc.
Can you persuade the driver (him) to give us a lift?
Also after verbs of mental perception, such as: expect, know, believe,
acknowledge, understand, admit, assume, deny, prove, etc.
We expect the transport company (them) to cover the loss to our
property.
c. Complex Object with a bare Infinitive is used after verbs expressing
perception or observation (hear, see, feel, notice, observe, watch),
verbs have, get (=make) and expressions would rather (not), would
sooner (not), had better (not).
They watched the captain (him) sign the Bill of Lading.
You’d better insure the cargo.
I’d rather not be told the truth.
I’ll have you speak English in no time.
They are followed by a to-infinitive in the passive:
The hi-jackers were seen to unload the cargo.
d. Complex Object with a bare Infinitive is used after verbs make, let:
She made them send money back to relatives.
Let’s rent space in the cargo compartment of a ship!
Let’s purchase insurance, shall we?
The negative is:
Let’s not (insure our cargo). Or: Don’t let’s (insure our cargo).
They won’t let us sell the shares.
Make is followed by a to-infinitive in the passive:
They were made to send money back to relatives.
Let is not used in the passive; the forms to be allowed (to be
permitted) are used instead.
We were allowed to make the claim.
– 61 –
e. We may use a bare infinitive or a to-infinitive after help and know. The
use of a to-infinitive is more formal:
Our partner helped us (to) transport the goods.
Everyone in the company helped (to) build an extension.
We do not usually omit to after not.
How can I help Mr. Grant not to worry about the cargo?
We use to in the passive:
He was known to be released /to have been released by the gang.
f. When the verbs hear (=to learn), see (=to understand), feel (=believe,
experience) express mental perception they cannot be followed by
Complex Object, but require an object clause:
I hear (that) you have had successful talks.
Exercise 2
a. Complete these sentences so that they refer to other people.
Model: I don’t want to speak to the adjuster. I want Tom to speak to him.
1. Coburn doesn’t expect to sell the shoes. It expects the commodity
specialist ___________ .
2. I don’t want to explain how to ensure the return on the sale. I’d like
an expert _________ it.
3. You won’t listen to me. How many times do I have to ask you ____?
4. John McEnroe doesn’t want anyone to know about Garcia’s strange
idea. He’d hate anybody _______ .
5. I can’t draw up a special contract myself. I need a lawyer ________ .
6. We can’t provide funds to support this unexpected proposal. Perhaps
our partners can help us ____________________ .
b. Rewrite these sentences to begin with the words in italics.

Model: He’d like to remit some money to his “old country”.

He can’t afford it.
He can’t afford to remit some money.
1. The transport company must cover the loss to the property of Harper
& Grant. It intends _____________________________.
2. He’ll send a tentative order for the gears. He’s offering. ____________.
3. He wants to rent space in the cargo compartment of a ship for one
voyage. He’s just applied. __________________________ .
4. Purchase insurance? I refuse. ______________________________

– 62 –
5. The exporter didn’t sell directly to a firm in his own country. He failed.
_______________________________ .
6. Can you inspect the damaged goods tomorrow? Can you manage ____?
7. Coburn Tool Corporation manufactures large and small machine tools
and parts, gears, valves, and bearings. It offers _______________.
8. He would suffer a complete loss. He couldn’t afford it. ____________ .
c. Supply suitable infinitive forms for the verbs given in brackets.

Model: Let’s buy Japaneese radios. (buy)

1. He made me _________ the mess. (to clear up)
2. John Martin thought that he had better ____ to find an agent to act for
Harper & Grant Ltd. (to try)
3. Mary would sooner ___ than ___ him for another penny. (to starve, to ask)
4. “What makes you ______ that someone from the firm ought to go up
and give us an opinion of the damage?” (to think)
5. Sally is sure there’s nobody in the world she would rather _____ with
or ______ greater respect for. (to work, to have)
6. You had better ________ the way of life, Peter. (to change)
7. Do let’s ____ somewhere a little more forward-looking! Or I would
rather ______! (to go, to die)
8. Don’t let Mr. Duncan ____ so early. He is a very valuable customer.
(to leave).
9. What made you _____ that their quotations were reasonable? (to
think)
10. I watched the customs officers ________ (to examine) the airway bill
carefully.
11. The insurance broker saw his client’s face _______ (to change).
12. Ben had the secretary ______ (to bring) him the insurance policy for
the load.
13. Let us ________ (to consider) the responsibility of the carriers
because the damage is caused by negligence on the part of the driver.
d. Rewrite these sentences in the passive voice.
1. He made me repeat the instructions. I _________________________ .
2. He saw the lorry begin to roll forward. The lorry ________________.
3. The Chief Executive Officer reluctantly let me go on a leave.
_________________________________________________________.
4. We must send him a Dangerous Goods Note. He ________________ .
– 63 –
5. I advised him to ask for a Certificate of Insurance. He ____________.
6. The bank robbers made the cashier show them how to open the safe.
The cashier ______________________________________________.
7. She saw the visitor fill in the application form. The visitor
________________________________________________________.
8. The police made him sign a paper admitting his offence against the
regulations. He ___________________________________________.
9. The Managing Director let the old craftsman make a mahogany desk
for the Minister’s personal use. The old craftsman _______________.
e. Complete the sentences using an object +to-infinitive after the verbs.
Model 1: Take out an all-risks policy. My partner advised me to take out
an all-risks policy .
1. She didn’t advise our principles that the proceeds of our transfer had
been credited to the beneficiary’s account only on the 1st of July. You
didn’t tell _______________________________________________ .
2. We work hard. Our instructor taught __________________________.
3. The bank executed the payment. The beneficiary ordered _________ .
4. You should not delay this payment. The manager has warned ______
5. Garcia wants to send a tentative order for gears. His experts advised
_______________________________________________________ .
6. Citizens can’t take more than a specified amount of money with them
when they travel abroad. The government forbids _______________ .
7. Doreen’s score is high and she will go to Green Coats, one of the
principle schools in London. Her high score entitles _____________ .
8. The driver of the lorry neglected the regulations. The adjusters
acknowledged ___________________________________________.

Model 2: People know that he is an expert in risk analysis. People know

him to be an expert in risk analysis.
1. The insurance agents discovered (that) the claim was false. ________ .
2. Mr. Roberts imagines that the damage is caused by negligence on the
part of the driver. _________________________________________ .
3. William Buckhurst believes that all goods are covered by a blanket
insurance policy. _________________________________________ .
4. H.G. found that the news concerning the hi-jacked lorry was too
discouraging. ____________________________________________ .

– 64 –
5. Everybody knows that Harper & Grant Ltd. is insured with a syndicate
of Lloyds underwriters. ____________________________________ .
6. He discovered that the invoice had been sent. __________________ .
7. She pretended that she knew next to nothing about a comprehensive
policy. _________________________________________________ .
8. They hope that their firm will succeed. ________________________ .
Model 3: He claims that he is an expert in work study surveys. He claims
himself to be an expert in work study surveys.
1. I expect that I will hear from my suppliers soon. ________________ .
2. He claimed that he had reduced the fees. ______________________ .
3. I arranged that I should do the accounts. _______________________ .
4. The inspection threatened that it would impose a penalty. _________ .
5. We consider that we are experienced enough to meet the special
requirements. ___________________________________________ .
f. Chose the correct variant.
1. I heard the partners had signed / sign a mutually advantageous
contract.
2. John noticed Sally be / was very pale and excited.
3. Kevin saw a new visitor enclose / enclosed a statement with the letter.
4. I hear Peter reported/ report on the expenditure against budget twice
last month but the Board still want him to do it again.
5. I felt something crawl / crawled on my back.
6. We feel this takeover bid threatens / threaten the future of our firm.
7. I see someone got / get away from prison this morning. It’s in today’s
news.
3. Is the infinitive or the ing-form used after the verbs of perception?
a. The bare infinitive generally refers to the complete action:
I watched the secretary type a letter on a paper with a printed
letterhead.
(i.e. from start to finish)
b. The -ing form generally refers to an action in progress:
I watched the secretary typing a letter on a paper with a printed
letterhead.
(i.e. I saw part of the action)

– 65 –
c. We may use hear, observe, perceive, see in the passive + -ing or a to-
infinitive:
She was seen executing the order.
She was seen to execute the order.
d. We may also use Past Participle as a part of Complex object:
The freight forwarders watched the crates loaded.

Exercise 3
Join these pairs of sentences, deciding when to use a bare infinitive or ing.
Model 1: Mr. Roberts was examining the furniture. Mr. Thorn saw him.
– Mr. Thorn saw him examining the furniture.
1. She was informing the beneficiaries. I heard her.
I heard _________________________________________________ .
2. The beneficiaries were instructing the bank manager. They were seen.
The beneficiaries were seen ________________________________ .
3. Mr. Roberts was reading the piece of paper stuck on the windscreen.
Mr. Thorn saw it.
Mr. Thorn saw ___________________________________________.
4. A man in the transport café was asking what Andersons’ driver was
carrying. The barman heard that.
The barman heard ____________________________________.
5. The newcomer was looking through the catalogues very thoughtfully.
Elizabeth Corby noticed that.
Elizabeth noticed _________________________________________.
6. The operators were showing the new machines in operation. The
visitors of the exhibition watched it.
The visitors of the exhibition watched _______________________
7. Christopher Thorn was making his comments about the confidential
file. Because of the noise in the room nobody heard that.
Nobody heard ____________________________________________.
Model 2: Mr. Roberts examined the furniture. Mr. Thorn saw him.
– Mr. Thorn saw him examine the furniture.
1. The customs officer examined the goods. We saw it.
We saw ________________________________________________.
– 66 –
2. They discussed the invoice in question. I listened to them.
I listened ______________________________________________ .
3. One of the clerks told a lie. Everybody heard it.
Everybody heard __________________________________________.
4. Fenella made a lot of spelling mistakes in the letters. J. Martin noticed it.
John Martin noticed ________________________________________.
5. The typist said the shipping documents were enclosed. She was heard.
The typist was heard _______________________________________.
Model 3: The furniture was examined. Mr. Thorn watched it.
– Mr. Thorn watched the furniture examined.
1. The goods were loaded on the steamer. The ship owner saw it.
The ship owner saw the goods _______________________________ .
2. The workers packed the crates. I saw it.
I saw the crates __________________________________________ .
3. The captain signed the Bill of Lading. The seller watched it.
The seller watched the Bill of Lading __________________________ .
Model 4: Mr. Grant wanted John to comment on the amount spent.
– Mr. Grant asked John to comment on it.
– Mr. Grant asked for the commentary.
– Mr. Grant asked for the commentary to be made.
1. The exporters wanted the beneficiary to draw the irrevocable letter of
credit.
2. The seller required the buyer to deliver the gears on FOB terms.
3. I’d like the contractor to provide materials as soon as possible.
4. We ordered the trainee to set the letter of inquiry.
4. What do we use after “have” + object?
a. When we cause someone to do something for us, we use have + object
+ bare infinitive:
Have the next client come in, please.
We may also use have + know, have + believe:
I’ll have you know I’m the company secretary.
b. We use have + object + -ing to refer to intended results, and unintended
consequences:
I’ll have you speaking English in no time.
Be careful! You’ll have the customers complaining.
– 67 –
Exercise 4

Use the bare infinitive or the -ing form after have in these sentences.

Model: Have him bring the complaints about unexecuted orders. (to bring)
(We cause someone to do something for us)

1. Mr. Grant had his secretary _____________ the interview with the
unwilling customer. (to interrupt)
2. I won’t have anyone _________ in my business affairs. (to interfere)
3. I’ll have you ______________ I’m a qualified accountant. (to know)
4. He had her ________ they executed payment as per the debit-note to
her. (to believe)
5. When the United States encountered serious balance of payments
problems in the 1960s, the government had all the banks ________
the number of loans they could extend abroad. (to reduce)
6. I would not have you _________ (to think), Mr. Thorn, that your
insurers need be liable for the damage.
7. Don’t let’s have them ________ the quantity of subsidies. (to reduce)

Model: We have people complaining about unexecuted orders all hours.

(to complain)
(We speak about intended results or unintended consequences)

8. Greece and Norway have their large maritime fleets _____________

transportation services. (to provide)
9. He is an excellent manager. He’ll have you _________ without a loss
in no time. (to operate)
10. He had never had anything like that _____ to him before. (to happen)
11. If we do not reschedule the production line, we will have employees
_______ to execute orders on time. (to fail)

– 68 –
5. What is Complex Subject and when do we use it?
The subject of the sentence is sometimes expressed by a noun (or
pronoun) and an Infinitive which follows the predicate. Although the
noun (or pronoun) and the Infinitive do not stand together, they are closely
connected and form a Complex Subject, which is used:
a. with verbs expressing permission, request, intention, order,
compulsion1 such as allow, permit, suffer, order, command, compel,
force, make, request, mean, intend, etc.
The customers were requested to be ready by 7 o’clock.
They were ordered to cancel the deal.
b. with verbs expressing perception of the senses, such as hear, see,
feel, etc.
They were seen to take out a policy at the Lloyds.
c. with verbs of mental perception, such as expect, know, believe, deny,
etc.
He was believed to have a letter of credit confirmed on the London
bank.
d. with verbs of saying and reporting , such as say, report, state,
pronounce etc.
This company is said to be set up as a trading subsidiary.
e. with such verbs as seem, appear, happen, prove, chance, etc., and
with expressions to be sure (certain, uncertain, likely, unlikely).
Here the predicate is in the Active Voice:
He appears to be very enterprising.
Exercise 5
A. Complete the following sentences using a Complex Subject.
a) with the verb “turn out” .
1. They hired him but he___________________ (to be quite unfit for it).
2. We signed what we thought the profitable contract but it ________ (to
gain no profit).
                                                            
1
Принуждение, насилие.
– 69 –
3. The prudent exporter purchased insurance for his cargoe’s voyage,
because a cargo ______________ (to be vulnerable to many dangers).
b) with the verb “happen”.
1. The contractors ________ (to fail to deliver the goods on time).
2. The pro forma invoice _____ (to be the only solution to the problem)
3. They __________ (to pick the wrong person for the job).
B. Paraphrase the following using a Complex Subject with the verbs
in brackets.

1. The Annual Board Meeting will be attended by all the shareholders of

Harper & Grant Ltd. (to suppose).
2. The company will have to hire more engineers and construction
supervisors in connection with the rush of urgent orders (to expect).
3. Invisible trade involves the exchange of services between nations (to
know).
4. Foreign trade occurs because a country often does not have enough of
a particular item to meet its needs (to believe).

C. Translate the following. Sentences. Pay attention to the way the

Complex Subject is translated.

1. They are supposed to know these things.

2. Today Britain is unlikely to join EMU.
3. Euro-scepticism seems to be related to the functioning of the EU
rather than to the idea as such.
4. They were seen to load the filing cabinets.
5. The Senator was reported to be badly injured in the accident.
6. A week later the lorry was found abandoned.
7. He was reported to be preparing the yearly breakdown of overheads.
8. She was not expected to reply, but she did.
9. I just happen to be passing, so I dropped in.
10. The expenditure against budget is sure to be outrageous.

– 70 –
 REVISION
Exercise 1
Choose the only correct answer. Use the Complex Object and
Complex Subject.
1. During the winter, the Bahamas would like … large numbers of tourists
who spend money for hotel accommodation, meals, taxis, and so on.
(A) attract (C) to attract
(B) attracted (D) to be attracted
2. Tourism is known … another form of invisible trade.
(A) be (C) to have been
(B) being (D) to be
3. The railroads of the United States and South America are said … by
British capital.
(A) to have been build (C) have been built
(B) to have been built (D) to have been building
4. Peter made Ghristopher Thorn … to the Moorland Valley and … his
opinion of the damage.
(A) to go up … give (C) has gone … has given
(B) go up … give (D) go up …gives
5. The Managing Director ordered … without further delay.
(A) to type the letter (C) the letter to be typed
(B) the letter being typed (D) the letter be typed
6. Mr. Morgan was made … that their firm had put “Harper & Grant Ltd
“ in a nice mess.
(A) to understand (C) to have understood
(B) understand (D) have understood
7. Have you heard the secretary … our partners?
(A) to phone (C) have phoned
(B) phone (D) phoned
8. Mr. Grant was heard … the way he had managed to salvage the lot of
office furniture.
(A) explain (C) explaining
(B) be explaining (D) to have been explaining
9. The goods are reported … since early morning.
(A) to have been examined (C) to be examined
(B) to have been examining (D) to be examining
– 71 –
10 Everybody heard his name … during the negotiations.
(A) to be mentioned (C) be mentioned
(B) mentioned (D) to have been mentioned
11. She seems … the letter already. She looks happy.
(A) to have been reading (C) to have read
(B) to be reading (D) to read
12. Hector Grant was heard … William Buckhurst to discuss the vital
problems concerning the missing lorry full of office furniture.
(A) summon (C) to summon
(B) to have summoned (D) have summoned
Exercise 2
Translate into English, using the Infinitive.
1. Первое, что надо сделать, – это проинформировать наших страхо-
вых брокеров о краже грузовика как можно скорее.
2. «Я не допущу, чтобы Вы понесли убытки по нашей вине».
3. Вот интересное предложение, которое можно принять.
4. «Я предпочел бы скорее умереть, чем позволить нашей фирме
работать без страховки на все случаи жизни». – вскричал Гектор.
5. Мистер Грант обратился в транспортную компанию Андерсонс,
чтобы договориться о найме машин для перевозки партии офис-
ной мебели.
6. Мистер Робертс имел достаточно опыта и знаний в области стра-
хового дела, чтобы обследовать поврежденный товар и рекомен-
довать возместить ущерб в размере 75% от стоимости страховки.
7. Чтобы получить работу, Вам нужно отправить Ваше резюме
нескольким работодателям.
8. Мистер Бакхерст ожидал, что представитель фирмы оценщиков
выскажет свое мнение относительно стоимости ущерба, нане-
сенного грузу.
9. Кристофер Торн был не согласен с представителем компании
страховых оценщиков. Он хотел бы, чтобы компания выплатила
больше, чем 75% от стоимости страховки.
10. Мы намеревались заказать эти товары, но не заказали.
11. Было трудно отказать в его просьбе пригласить независимого
оценщика для расследования происшествия.
12. Короче говоря, я не хотел оставаться в страховой компании, но
мне пришлось.

– 72 –
Exercise 3
Translate into English, using Complex Object where possible.
1. Я заставил стажера прочитать инструкцию еще раз, а затем разре-
шил включить прибор.
2. Поставщик хочет, чтобы груз был застрахован.
3. Я слышал, что представители наших фирм подписали взаимо-
выгодное соглашение.
4. Мистер Мартин слышал, что его коллега уже докладывал Мисте-
ру Гранту о результатах своей командировки в Абраку.
5. Он не слышал, как я постучал в дверь.
6. Джон заметил, что Салли очень взволнована. Он ожидал, что Сал-
ли объяснит, в чем дело.
7. Никто не заметил, как водитель посадил в машину мужчину, ко-
торый явно не являлся работником транспортной компании
Андерсонс.
8. Я слышал, что имя Джона Мартина упоминалось несколько раз
на заседании Совета Директоров. Я вел протокол заседания.
9. Покупатели видели, как ящики упаковали и погрузили на судно.
10. Секретарь видела, что вошел новый посетитель, и ожидала, что
он представится.
11. Мы рассчитываем на то, что Вы немедленно зафрахтуете судно и
купите страховой полис, покрывающий все риски.
12. Заказчики ожидают, что столы будут доставлены через три дня.
13. Управляющий разрешил менеджеру по продажам отправить
товары самолетом.
14. Покупатели просили отгрузить товары первым судном.
15. Я почувствовал, что кто-то дотронулся до моей руки.
16. Управляющий директор приказал отгрузить товары без задержки.
17. Гектор Грант приказал своему агенту застраховать партию офис-
ной мебели как можно скорее.
18. Он приказал доставить каталоги немедленно.
19. Слушатели чувствовали, что его рассказ был правдив.
20. Я никому не позволю вмешиваться в мои дела.
21. Им позволили отослать деньги обратно родственникам.
22. Нам не позволили подать жалобу.
23. Пусть производители потребуют, чтобы правительство предоста-
вило им субсидию для производства этого товара, т.к. они стра-
дают от конкуренции зарубежных соперников.
– 73 –
Exercise 4
Translate the following sentences using the Complex Subject.
1. Отгрузочные документы, казалось, были в полном порядке.
2. Вероятно, заказчики были недовольны качеством товара.
3. Похоже на то, что смерть мистера Харпера вызовет серьезный
кризис в компании.
4. Мистер Робертс и мистер Торн, кажется, не достигли соглаше-
ния по вопросу оплаты страхового полиса.
5. Вы, случайно, не знаете причину задержки платежа?
6. Случилось так, что два контейнера офисной мебели остались в
порту.
7. Говорят, что Гектор Грант возглавляет фирму “Харпер и Грант”
уже много лет. Она занимается производством офисного обору-
дования. Я случайно узнал, что они планируют выйти со своей
продукцией на новые рынки.
8. Мистер Грант наверняка проверил репутацию страховой компа-
нии. Сообщалось, что он оформил полис комбинированного
страхования. Он наверняка не отправит товар без страховки,
покрывающей все риски.
9. Полагают, что фирма “Харпер и Грант” выдает выписку по сче-
ту в конце отчетного периода (раз в месяц или раз в квартал) на
полную стоимость всех товаров, которыми занимается фирма.
10. Гектора Гранта вынудили позволить Бобу Хардиману работать
до его выхода на пенсию.
11. Так как ущерб, нанесенный грузу, вызван халатностью водителя
транспортной компании Андерсонс, страховщики компании
Ллоидс, вероятно, не будут нести ответственность за убыток.
12. В конце концов, заказчиков заставили подтвердить дату пла-
тежа.
13. Кажется, Ваша выписка по нашему счету от 25 августа не
соответствует нашим записям.
14. Наши партнеры наверняка подпишут контракт. Говорят, что они
согласились на скидку в 1,5%.

– 74 –
Exercise 5
Render the following into English using the Complex Subject to start
each sentence:
 It is stated … .
 It is said … .
 … appear(s) to be… .
 … prove(s) to be….
 … is considered to be … .
 … is known to be … .
Проблемы экономического развития отдельных стран мира, а также
глобальные проблемы мирового развития сделали необходимым
международное сотрудничество и международное разделение труда
для успешного решения проблем национального, социального и эко-
номического развития каждой отдельной страны. Характерной чертой
современного экономического развития подавляющего числа стран
мира является быстрый рост внешнеэкономических связей. Основ-
ными элементами международных торговых связей являются экспорт
и импорт. Различают экспорт товаров, услуг, рабочей силы, капита-
лов, технологий. Зарабатывая валюту, экспортер получает возмож-
ность приобретать нужные ему товары за рубежами страны. Импорт
позволяет приобретать товары, не производящиеся в стране, либо те,
приобретение которых более выгодно, чем производство в своей стра-
не. Сумма экспорта и импорта составляет внешнеторговый оборот,
или товарооборот страны. Различают активный (положительный) то-
варооборот, когда экспорт больше импорта, и пассивный (отри-
цательный) товарооборот, когда экспорт меньше импорта.
Writing Essays
Write a 200-word opinion essay according to the following plan.
 Introductory paragraph 1 – one or two sentences defining the
problem set by the topic statement. The goal of your introductory
paragraph is to show the divergence of opinions.
 Essay body – paragraphs 2, 3, 4 explaining:
Paragraph 2 – your attitude to the topic statement – each topic
sentence should be followed by 2–3 supporting sentences which justify
the argument presented in it by giving examples or reasons. The goal of
your essay body is to present your opinion.

– 75 –
 Paragraph 3 – opposing opinion followed by 1–2 supporting sentences
Paragraph 4 – explaining why you do not agree with your opponents
 Conclusion Paragraph 5 restates your opinion. The goal of your
conclusion is to support your strong position.

Topics for opinion essays

 The prudent exporter should purchase insurance for his cargo’s voyage.
 Free trade agreements cause disputes between countries.
 Globalization sharpens competition between companies.
 International Trade Organisations & Agreements offer a lot of benefits.
 Investment acts as a catalyst in international trade.
 Barter deals are obsolete.
 The state should intervene in the economy

Topics for the Power Point presentations:

1. International Trade: Export and Import.

2. International Trade: Investments.
3. Visible and Invisible Trade.
4. A Nation’s Balance of Payments.
5. European financial centers.
6. US financial centers.
7. Insurance: functions, classification, insurers, insurants, premium.
Lloyds Underwriters.
8. Forex.
9. Eurocurrency market.
10. Trade restrictions: tariffs, subsidies, quotas and cartels. How trade
restrictions affect international trade.
11. Documents needed in international trade.
12. Incoterms.
13. International Trade Organisations & Agreements. World Trade
Organization.
14. EU, Maastricht Treaty, EMU
15. European exchanges
16. The City of London.
17. Eurozone
18. Countertrade: barter, offset, buyback, switch trading, counter
purchase.

– 76 –
 2 THE FIRM AND ITS ENVIRONMENT

AGENDA

2.1 Lead-in Prereading

2.2 Language input Developing vocabulary

2.3 Background information The Firm and Its Environment

2.4 Comprehension Understanding the reading

Scanning
2.5 Speaking & Writing Fill-in exercises
Writing reports & compositions
Language focus Word-building
Presenting information
Skills Focus
2.6 Dialogue 1 Types of securities
Dialogue 2 Mergers, Takeovers, Acquisitions
Supporting materials
2.7 Reading for Cross-cultural New Product Developement
Associations
2.8 Case study & Role play 1 The merits and demerits of
reorganization:
Case study & Role play 2 A management/ employee
conflict
2.9 Grammar Back Up The ing-Form & Past Participle

Writing Essays
Topics for Power Point presentations

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2.1 LEAD-IN
Section Overview
The major actors in a company’s micro-environments are the company
itself, suppliers, market intermediaries, customers and competitors. In
this section, you will learn how small and large businesses are
organized and challenges they face.
2.2 LANGUAGE INPUT
article n статья, пункт, параграф
articles устав, договор, соглашение
Articles of Association устав акционерной компании
asset n актив(ы)
assets средства, имущество, активы, фонды,
капитал, ресурсы, достояние
bankrupt n банкрот, несостоятельный должник
bankrupt v довести до банкротства, разорить
bankruptcy n банкротство, несостоятельность
board n орган управления, совет, департамент,
министерство, управление
a board of directors совет директоров, правление
bond n облигация, закладная; долговое
обязательство, долговая расписка
capital n капитал (разность между активами и
обязательствами); собственные
средства владельца предприятия;
основные средства
authorized share capital разрешенный к выпуску
акционерный капитал
borrowed (debenture) capital одолженные средства, заемный
капитал
current / working capital оборотный капитал
fixed capital основной капитал
capital adj относящийся к капиталу
capital assets=fixed assets основные средства/фонды, матери-
альные внеоборотные (долгосрочные)
активы, основной капитал
capital gains доход(ы) от прироста капитала
capital goods средства производства, инвестицион-
ные (капитальные) товары
(производственное оборудование, завод,
другие хозяйственные постройки,
административные помещения и т. п.)
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charter n уставные документы корпорации;
свидетельство о государственной
регистрации;
a charter of incorporation устав и сертификат об
инкорпорации (лицензия)
corporation n корпорация; в США – акционерная
компания с ограниченной
ответственностью
dividend n дивиденд: часть прибыли компании,
распределяемая среди акционеров;
entrepreneur n предприниматель, владелец
entrepreneurship n предприятия
предпринимательство
equity n акционерный капитал, собственный
syn net worth капитал, чистый капитал; право на
активы; обыкновенная акция
owner’s equity собственный (акционерный) капитал
= shareholder/ equity (компании), уставной фонд
= stockholder equity
equity finance финансирование проектов путем
выпуска акций
equity (stock) market рынок ценных бумаг
file v регистрировать, подшивать; подавать
заявку, представлять документ
fine v штрафовать, налагать штраф
gearing доля заемного капитала в собственном
Amer .syn leverage капитале компании; гиринг (отношение
заемного капитала к собственному капи-
талу; характеризует интенсивность
использования заемных средств)
gearing adjustment корректировка доли собственного
капитала
high-geared company компания с большой долговой
нагрузкой (с большой долей
заемного капитала)
hedging n хеджирование, страхование от потерь
hierarchy n иерархия, «служебная лестница»
hierarchical иерархический
inventory n запасы товаров, сырья и готовой
продукции компании; портфель
ценных бумаг (физического лица)
legal adj правовой, юридический; законный;
узаконенный; легальный
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legislature n законодательная власть;
syn legislative законодательные учреждения
legislative adj законодательный, введённый законом,
назначенный законом
liability n обязательства; долги; задолженность;
пассив; ответственность, обязанность
limited liability ограниченная ответственность
(акционера)
public limited company открытое акционерное общество,
(plc.) открытая (публичная) компания с
ограниченной ответственностью
(общество, акции которого находятся в
открытой продаже на фондовой бирже;
его учредители отвечают по обязатель-
ствам общества только в пределах своих
вкладов в его уставной капитал)
margin n разница (между себестоимостью и
продажной ценой), маржа; прибыль;
предел (доходности); запас денег,
мощность
memorandum n меморандум
memorandum of меморандум об ассоциации: (Бр. –
association документ, представляемый для
регистрации новой компании),
устав юридического лица, устав
акционерного общества
overdraft n нехватка средств на счете;
кредитование банком расчётного счёта
клиента для оплаты им расчётных
документов при недостаточности или
отсутствии на расчётном счёте
overdraft facility клиента-заемщика денежных средств
возможность списания со счета
большей суммы, чем имевшийся к
моменту списания остаток
средств
ownership n собственность, владение; право
собственности

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partnership n товарищество (Бр. – ассоциация от 2 до 20
лиц, партнеры несут неограниченную от-
ветственность по обязательствам; США –
неограниченную ответственность обычно
несут «общие» партнеры (general partner),
занимающиеся повседневным руководст-
вом деятельностью товарищества, а «пас-
сивные» партнеры отвечают только сво-
им вкладом (limited partnership)
premises n недвижимость, здания с прилегающими
постройками и участками
proprietorship n право собственности, собственность;
владение, хозяйство
sole proprietorship единоличное владение,
syn. personal property единоличное хозяйство
Registrar n регистратор акций; регистратор
облигаций; служащий отдела записи
актов гражданского состояния
share n доля, часть, доля участия, пай; акция
stock n запас; акция
share of stock акция, доля в акционерном
капитале
stockholder/shareholder акционер
sue v подавать в суд, вчинить иск
trade v торговать; делать покупки;
обменивать(ся)
insider trading инсайдерные торговые операции с
ценными бумагами (незаконные операции
с ценными бумагами на основе внутренней
информации о деятельности компании-
эмитента)
venture n рискованное предприятие; спекуляция;
коммерческое предприятие
venture v рисковать, спекулировать
venture capital «рисковый капитал» –
вкладываемый в проекты с
повышенным уровнем риска
joint venture совместное предприятие

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 DEVELOPING VOCABULARY
2.2.1 Consult a dictionary and practise the pronunciation of the
following words and word combinations, quote the sentences in
which they are used in the text or submit the examples of your
own:
Articles of Association 
assets and liabilities 
authority
characteristics
charter of incorporation 
consequently 
contingency 
detailed records 
dividend 
entrepreneur
entrepreneurship
fiduciary
hierarchical
high-geared company
inventory
legal entity
legislative
legislature
liability for debts
margin
obsolete equipment
ownership transfer
profile of a company
sole proprietorship
the case of bankruptcy
the gearing of the company
the registrar of companies
three-year tenure
to be sued
venture capital institutions
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2.2.2 Match the English word combinations in the left-hand column
with the Russian equivalents in the right-hand column:
1. to be liable for the A возможность списания со счета
amount of capital большей суммы, чем имевшийся к
somebody has invested моменту списания остаток средств
2. a sole proprietorship B облагаться налогом
3. to be taxed C норма прибыли на акцию / облигацию
4. to hire and fire workers D кассовый разрыв
5. the rate of return on E организации, вкладывающие средства
stocks / bonds в создание новых компаний, часто с
повышенным уровнем риска
6. to be sued F заменить устаревшее оборудование
7. the assets of a company G быть оштрафованным
8. venture capital H полное товарищество (с
institutions неограниченной ответственностью)
9. to be fined I выступать в качестве ответчика в суде
10. general partnership J нанимать и увольнять служащих
11. the gap between payment K компания с высокой долей заемного
due to suppliers and капитала (со значительными
payment owed by долговыми обязательствами)
customers
12. to replace obsolete L имущество, активы, фонды, авуары,
equipment капитал, ресурсы компании
13. to raise the amount of M материально-производственные
money needed запасы; опись имущества,
инвентаризация:
14. ownership transfer N передача собственности
15. limited liability O получить доход от прироста капитала
16. to keep detailed records P вести подробные учетные записи
17. high geared company Q мобилизовать/добыть/занять
необходимую сумму денег
18. overdraft facility R нести ответственность в пределах
инвестированного капитала
19. inventory S единоличное владение (хозяйство)
20. to make capital gains T ограниченная ответственность
(акционера)
21. to obtain a charter of U получить сертификат об
incorporation инкорпорации (лицензию)
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2.3 BACKGROUND INFORMATION
The Firm and Its Environment
The basic economic institution in different economic systems is the
business. Businesses determine much of how the economy operates.
Businesses produce goods and services, and they come in every shape and
size. Although the vast majority of the world’s companies are small, in
many countries the economy is dominated by large firms. Large businesses
differ from small ones in a wide variety of ways. In many countries there
are nationalised companies belonging to the state, as well as private
companies. A private company might be a small firm with just one owner
or a very large firm with thousands of shareholders “owning” the firm.
Starting a business requires more than natural resources, labour, and
capital. An entrepreneur must organize these resources. Many
entrepreneurs start their own business as sole proprietorships. A sole
proprietorship is a one-owner business. The advantages of sole
proprietorships (they are easy to organize, decisions can be made quickly,
owners receive all profits, etc.) explain why so many people start
businesses and try to run them alone. However, a sole proprietor
sometimes encounters difficult problems in starting a business. One person
has limited resources to start and operate a business. The owner has only
personal savings and funds that can be borrowed. Because capital is
lacking, most sole proprietors begin small and fail. Even those that
succeed often stay small.
A sole proprietor also must deal with the problem of limited liability.
According to the law, the owner and the business are one and the same. If
the business fails, the owner must pay the debts. The personal property of
the owner, such as a home or a car, can be taken to pay the debts of the
business. No limit is placed on the amount the owner can lose. High profits
can make an owner wealthy, but high losses can ruin an individual.
Still another problem occurs because of the limited life of the business.
If the owner of a sole proprietorship dies, an entirely new enterprise must
be started. Of all new proprietorships begun each year, 70 per cent fail
within five years. To increase their chances of success entrepreneurs often
choose partnership instead of sole proprietorship. A partnership is an
association of two or more people in order to run a business. Partners
generally contribute equal capital, have equal authority in management,
and share profits or losses. In many countries, lawyers, doctors and
accountants are not allowed to form companies, but only partnerships with
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unlimited liability for debts – which should make them act responsibly. A
partnership has many of the characteristics of the sole proprietorship.
Partnerships are easy to organize, decisions can be made quickly, profits
are shared with only a few people, and the owners are responsible for
success or failure of the business.
Like proprietorships, partnerships are not free of problems. Liability is
still unlimited. Like sole proprietors, partners are responsible for the debts
of the business. Liability then can actually be greater in a partnership than
in a sole proprietorship, since each partner is responsible for all the
business debts. Partnerships also have limited life. If one partner dies, the
business must be dissolved.
Within a free market system, new businesses find easy access to the
economy and opportunities to succeed. Nevertheless, the level of
competition can be so high that success is very difficult. A partnership is
not a legal entity separate from its owners; like sole traders, partners have
unlimited liability: in the case of bankruptcy, a partner with a personal
fortune can lose it all. Consequently, the majority of businesses are limited
companies (US – corporations), in which investors are only liable for the
amount of capital they have invested. If a limited company goes
bankrupt, its assets do not cover the debts, they remain unpaid (i.e.
creditors do not get their money back).
Often one person does not have enough money to start a business.
Combining the resources of a number of people and forming a corporation
is a way to raise the large amount of money needed. A corporation is a
business that, although owned by one or more investors, legally has the
rights and duties of an individual. Corporations have the right to buy, sell,
and own property. Corporations may make legal contracts, hire and fire
workers, set prices, and be sued, fined and taxed. A business must obtain
a charter of incorporation from a state legislature to be legally
recognized as a corporation.
A corporation issues shares of stock which are certificates
representing ownership in the corporation. Investors buy and sell these
shares of stock. Often hundreds and even thousands of small investors own
stock in a single corporation. Because a corporation may have many
owners, the stockholders elect a board of directors. Stockholders have
one vote for each share of stock they own. The board of directors hires
individuals to manage the day-to-day operation of the corporation. These
individuals include the president and other chief administrators of the
company. Most important, the board of directors manages the resources of
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the corporation in order to produce a profit. If the corporation makes a
profit, shareholders may receive a dividend – a share of the profit paid on
the stock. The board of directors decides how much of the profit should be
divided among stockholders. The board may decide to reinvest some of the
profit in the corporation for expansion, modernization, or research and
development.
Corporations have some advantages over sole proprietorships and
partnerships. First, a corporation has limited liability. Thus if the
corporation goes bankrupt or is sued, the stockholders lose only the value
of their stock. The stockholders, who are the corporation owners, cannot
be held personally responsible for any money the corporation owes.
Second, corporations have the ability to raise very large amounts of
money. They use this money to change models, replace obsolete
equipment, and build new factories. Corporations can raise money by
selling bonds, as well as stocks. A bond is a certificate that promises to
pay the holder of a bond, the investor, a certain amount of money on a
certain date. Stocks and bonds differ in two important ways. Bonds, unlike
stocks, do not represent ownership in the corporation. Also the rate of
return on stocks changes; the rate of return on a bond is set when the
bond is sold. Third, a corporation has an unlimited life. That is the
corporation continues to function despite death, transfer, or changes in
ownership, management, or labour. The work of sole proprietor or partners
can end abruptly in such circumstances. This stability attracts small
investors. The fourth advantage of corporation is the ease of ownership
transfer. Selling a small business may be difficult; selling shares of stock
is relatively easy. The investor also has an advantage. The ability to get out
of one business, by selling stock, and into another quickly, by buying
stock, is quite useful to small investors.
Corporations have disadvantages as well as advantages. First, complex
forms must be filed with the state or federal government. A charter must
then be issued, investors found, shares sold, and manufacturing or sales
begun. The procedure for setting up a corporation is more difficult than
that for setting up a sole proprietorship or a partnership. Also, to succeed a
corporation must pay stockholders regular dividends and must keep
detailed records to satisfy appropriate government agencies.
Second, a corporation’s profits are subject to double taxation. A
corporation must pay taxes on its profits before the profits are distributed
to stockholders as dividends. The stockholders include this dividend
money as personal income on their income tax forms. Stockholders pay
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taxes on this income. The government, then, has taxed the corporation’s
profits twice.
Third, in corporations with many owners or stockholders the individual
share of profits in the form of dividends is comparatively small. In a single
proprietorship or partnership, profits are divided among fewer individuals.
Therefore, individual incomes are often greater.
Fourth, a corporation’s owners do not directly control the business.
Most individual stockholders take little interest in management decisions.
In contrast, sole proprietors or partners manage their own business. The
main concern of the owner-managers is the success of the business.
Managers of large corporations, though, may not have invested their own
money in the business. Career decisions may be different from, and more
important than, decisions to improve the business. For this reason many
corporations arrange for management to own shares of stock.
In very large firms the shareholders have very little to do with the day-
to-day running of the firm. This is left to the management. Large
companies may be organized into several large departments, sometimes
even divisions. The organisational structure of some companies is very
hierarchical with a board of directors at the top and the various
departmental heads reporting to them. Often the only time shareholders
can influence the board is at the yearly shareholders’ meeting.
In Britain most smaller enterprises are private limited companies which
cannot offer shares to the public; their owners can only raise capital from
friends or from banks and other venture capital institutions. A
successful, growing British business can apply to the Stock Exchange to
become a public limited company; if accepted, it can publish a prospectus
and offer its shares for sale on the open stock market. In America, there is
no legal distinction between private and public limited corporations, but
the equivalent of a public limited company is one registered by the
Securities and Exchange Commission.
Founders of companies have to write a Memorandum of Association
(in the US, a Certificate of Incorporation), which states the company’s
name, purpose, registered office or premises and authorised share
capital. Founders also write Articles of Association (US = Bylaws),
which set out the rights and duties of directors and different classes of
shareholders. Companies’ memoranda and articles of association, and
annual financial statements are sent to the registrar of companies, where
they may be inspected by the public.

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2.4 COMPREHENSION
Understanding the reading
2.4.1 Give extensive answers to the questions. Use the following
expressions to present your answers:
It ran through my mind that … .
… beyond the shadow of a doubt.
To begin with … .
I’m afraid I don’t know up from down … .1
Frankly speaking, I am in a real predicament … .2
1. What makes an entrepreneur choose partnership instead of sole
proprietorship? What characteristics of the sole proprietorship do
partnerships have? In what way do they differ?
2. Why is a limited liability a mixed blessing?
3. Why are lawyers, doctors and accountants prohibited from forming
companies with limited liability in some countries?
4. Why are the majority of businesses all over the world limited
companies? What does it mean?
5. What are the advantages of corporations over the other forms of
businesses?
6. What disadvantages do the corporations face?
7. What are the rights and duties of a corporation? What should be done
in order to be legally recognized as a corporation?
8. What is a share of stock? What role do the stockholders play in the
activities of a corporation? Who runs the day-to-day operation of the
corporation?
9. What is a dividend? Who decides in what way the profit of the
company should be distributed?
10. Why do many corporations arrange for management to own shares of
stock?
11. What is understood by a public limited company in Great Britain? In
what way does it differ from the similar businesses in the USA?

                                                            
1
Боюсь, что я не знаю, что к чему.
2
Честно говоря, я в замешательстве.
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 Scanning
2.4.2 Scan the text to determine whether these statements are true (T)
or false (F), and if they are false say why.
e.g. In my opinion it is true that ... / I’m afraid it is false that ... because ...
1. If the business has debts and one of the partners dies, the others are
barely responsible for his debts.
2. Corporations are easy to organize, decisions can be made quickly,
profits are shared with only a few people, and the owners are
responsible for success or failure of the business.
3. If the corporation goes bankrupt or is sued, the stockholders lose the
value of their stock. They are personally responsible for any money
the corporation owes.
4. Bonds represent ownership in the corporation.
5. In corporations with many owners or stockholders the individual share
of profits in the form of dividends is comparatively small.
2.4.3 Develop the following ideas. Make use of the active vocabulary
given in brackets:
1. The advantages of sole proprietorships explain why so many people
start businesses and try to run them alone.
(to be a one-owner business; to be easy to organize, to make decisions;
to receive profits; to run the business; to encounter difficult problems; to
have limited resources; to deal with the problem of limited liability; to
take the personal property to pay the debts of the business; to start an
entirely new enterprise)
2. To increase their chances of success entrepreneurs often choose
partnership instead of sole proprietorship.
(to be an entrepreneur, to contribute equal capital; to have equal
authority in management; to be easy to organize; to be responsible for
success or failure of the business; to lose a personal fortune in the case
of bankruptcy; unlimited liability for debts)
3. The majority of businesses are limited companies, in which investors
are only liable for the amount of capital they have invested.
(to go bankrupt; assets do not cover the debts; to form a corporation; to
raise the large amount of money needed; to have the right to buy, sell,
and own property; to make legal contracts; to hire and fire workers; to
set prices; to be legally recognized to be sued, fined and taxed; to obtain
a charter of incorporation; to issue shares of stock; to represent
ownership in the corporation; to buy and sell shares of stock)
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4. Corporations have disadvantages as well as advantages.
(to be filed with the state or federal government; to issue a charter; to set
up a corporation; to pay stockholders regular dividends; to keep detailed
records; to be subject to double taxation; to include something. on
income tax forms; to control the business; to invest own money in the
business; to arrange for management to own shares of stock)

2.4.4 Match each of the phrases on the left with an appropriate

explanation on the right. Use the grid below:
1. company (UK) /A a company whose shares are not publicly
corporation (US)available
2. public companyB an organization which is part of the state
organisation
3. private company C an organization operating to make a profit
4. cooperative D a company which owns another
5. enterprise E a firm where shareholders’ liability is limited
6. government agency F firm owned by a parent company
7. limited company G documents showing income, expenditure,
assets and liabilities, sales records, etc.
8. offshore company H two or more partners working together for
profit, without limited liability
9. minority interest I a new commercial activity
10. parent company J cash items, or items that can easily be changed
into cash for the present financial year
11. partnership K company in which another firm has less than
a 50% interest
12. subsidiary L items of value which are not easily changed
(affiliate) into cash but which the business needs.
13. company accounts M a firm based in a tax haven to avoid higher
taxation
14. fixed assets N a democratic firm owned by its workers
15. current assets O a company whose shares are publicly
available

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15
C

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2.4.5 There are five main types of legally constituted company. Tick
the correct characteristics for each business type, or write
“possibly” if the characteristic could apply. Give a brief
description of the companies:
public private sole partnership cooperative
limited limited trader
company company
single individual
owns a company
two or more
owners / directors
quoted on stock
exchange
workers run the
company
unlimited liability
limited liability
owner is
self-employed

2.4.6 Scan the text again and find the English equivalents for the
following:
A.
1. оборотный капитал, оборотные фонды, оборотные средства
2. мобилизовать необходимую сумму денег
3. устав акционерной компании
4. передача собственности
5. норма прибыли на акцию/ облигацию
6. единоличное владение (хозяйство)
7. нанимать и увольнять служащих
8. разрешенный к выпуску акционерный капитал
9. организации, вкладывающие средства в создание новых
компаний, часто с повышенным уровнем риска
10. быть оштрафованным
11. имущество, активы, фонды, капитал, ресурсы компании
12. вести подробные учетные записи
13. нести ответственность в пределах инвестированного капитала
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14. полное товарищество (с неограниченной имущественной
ответственностью)
15. акционерная компания с ограниченной ответственностью (США)
16. выступать в качестве ответчика в суде
17. часть прибыли компании, распределяемая среди акционеров
18. ограниченная ответственность (акционера)
19. получить сертификат об инкорпорации (лицензию)
B.
В частной акционерной компании (private limited company) в Англии
может состоять от двух до пятидесяти членов (в их число не входят те,
кто в ней работает). Частная компания не должна направлять бухгал-
терские отчеты в бюро по регистрации акционерных компаний
(Registrar), но ежегодно заявляет туда о том, что она не предлагала об-
щественности свои акции или облигации. Частная компания – это за-
частую дело семейное, капитал для которого собран среди членов
семьи, которые, вследствие этого, владеют акциями компании. Но ак-
ции могут передаваться другим лицам только с согласия правления
компании. Конечно же, это большой минус для держателя акций част-
ных компаний. Т.к. каждая акция обладает одним голосом, у него дол-
жен быть по меньшей мере 51% акций, чтобы получить большинство
голосов, необходимое для разрешения передачи акций другому лицу.
Акции публичной компании с ограниченной ответственностью (PLC –
public limited company) могут свободно продаваться на бирже или в
ходе частных переговоров.

2.5 PRACTICE

Language focus
2.5.1 a. Read the extract and fill in prepositions wherever necessary.
b. Put a question to each of the sentences.
c. Give the text the appropriate heading.
_________________________________
To operate the business successfully, the manager needs to make
decisions that maximize the returns … the owners of the company. Such
decisions range … buying supplies from high-quality, low-cost suppliers,
… hiring … the best available workers, to investing … the best available
projects.

– 92 –
 The first form of equity is owner’s capital. This is the most exposed
form … capital since a return is received only … all other calls on a
company’s profits have been satisfied. Then … an extreme case –
bankruptcy – the owner’s equity will be repaid only … everyone else,
including employees, creditors, banks, etc., has received what they are
owed.
In successful times, the owners have a claim … all the net profit of the
company. They can go … other sources … equity finance: firstly, venture
capital (it is usually provided … venture firms interested … financing
high-growth companies). However, the provider usually demands a much
faster and higher rate … return than an owner would expect to form his
/her own capital. … the other hand, the venture capital company doesn’t
usually interfere … the running … the company.
2.5.2 a. Complete the text by using the following word combinations
from the box and fill in the grid.
b. Explain why, despite the technical and financial advantages of
large firms, there are so many small firms.
c. Make a list of advantages and disadvantages of small businesses
in relation to large firms.

A a small percentage J to be dominated by

B to stimulate the supply side of the economy K the division of labour
C on advantageous terms L encourage
D exploit economies of scale M the unemployed
E reduce N benefit
F share of the market O a low rate of interest
G amounts of capital P have access
H capital Q the cost advantage;
I employ
Small businesses are managed by their owner(s) and have a relatively
small (1)… . Small manufacturing firms (2) … fewer than 200 people. Large
firms are typically incorporated (limited companies), where ownership and
management are separated. Large companies that (3) … enjoy a cost
advantage over small firms in the same industry. In particular, large firms
have access to the following technical and financial economies. Technical
economies occur in the production of a good.

– 93 –
 As the firm expands, there is greater scope for specialisation and (4) … .
Large factories can employ specialist skilled workers to do the same job all
day with no time lost in changing tools or doing unfamiliar tasks. The
indivisibility of certain types of (5) … means that many production processes
are impossible on a small scale. Large firms can (6) … by linking production
processes that would otherwise be carried out in separate factories (a large
manufacturer of shirts can (7) … transport costs by combining the weaving
and cutting of cotton under the same roof).
Financial economies allow large firms to raise capital (8) … . Large firms
are considered to be reliable and are therefore charged (9)… and (10) … to
capital markets such as the stock exchange. Selling shares is a relatively
inexpensive method of raising large (11) … .
Despite (12) … to large firms of producing in bulk, small businesses find
a niche by providing specialized products for small markets (e.g. hairdressing
cannot easily achieve a large scale of operation, and tends (13) … small
firms). An irregular or limited demand for a product prevents mass
production. Small firms have the required flexibility and low overheads.
Often small firms survive by accepting subcontracting work from large
companies. In printing, where fixed costs form only (14) … of total costs,
low set-up costs (15) … the development of small firms. Where the market
for a good is restricted and highly localized, small firms survive, e.g. village
shops.
In an attempt (16) … the government has introduced a number of
schemes to help small firms to survive: the Enterprise Allowance is a weekly
sum paid to (17) … while they are setting up their own businesses; the
Business Expansion Scheme provides relief against income tax to investors in
unquoted companies.
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17
f

Skills focus
2.5.3 a. Read the text, ignoring the missing parts.
The greater the proportion of long-term debt, …(1)… . This is
connected with making decisions about the gearing of the company.
When a company is said to be “high geared”, the level of borrowing is
high when compared to its ordinary share capital. A lowly-geared
company has borrowings which are relatively low. High gearing has the
effect of increasing a company’s profitability when the company’s trading
– 94 –
is expanding; if it slows down, …(2)… . There will also be a drop in
profits if working capital is raised without a corresponding rise in
production or margins.
We can distinguish between permanent and temporary working
capital. …(3)… . The temporary working capital is usually serviced from
an overdraft facility.
Inventories (raw materials, work in progress and finished goods) are
part and parcel of working capital. …(4)… . It is the job of financial
manager to minimize the stocks of raw materials, the level of the work in
progress and the quantity of finished goods. His task is also to see that
generous credit terms are negotiated with suppliers but minimal credit is
offered to customers. …(5)… . A balance must be achieved between
getting and giving good credit terms …(6)… .
Another thing is that adequate cash should always be available for
meeting the company’s day-to-day debts and …(7)… . The expected cash
flows that will result from potential investment projects should be
measured carefully.
b. Look at the missing parts A-H and fit them in the gaps. There is one
extra you don’t need.
A The former keeps the business flowing throughout the year, while the
latter is needed from time to time to take account of seasoned, cyclical
or unexpected fluctuations in the business.
B In the UK a public company raises its capital by inviting the public to
take up shares.
C there should always be a reserve on hand to meet contingencies
D the more exposed the company is in times of economic difficulty
E If inventories are not well managed there will be an enormous amount
of excess working capital
F in order to attract customers and maintain positive relationships on the
one hand, and minimizing cash outlay on the other hand
G then the high interest charges associated with gearing will increase the
rate of slowdown
H It is often referred to as the debtor side, because working capital is
required to finance the gap between payment due to suppliers and
payment owed by customers1

1 2 3 4 5 6 7
D
                                                            
1
Кассовый разрыв.
– 95 –
c. Complete the chart and elaborate upon the uses of working capital:
Working capital
permanent / a. ___________
inventories debtors cash
b. _____ c.______ d. ____ e. _______ contingencies

d. Discuss the ways of funding the business. Make a full use of the
chart below:
Source of funds Advantages / disadvantages
Low gearing Owner’s capital Most exposed but claim on all
profits
Venture capital Demand very high rate of return but
doesn’t interfere in company
Unlisted securities Outside investors, no loss of control
market
Stock exchange Long-term solution to raising
money
25% in public hands therefore less
control
High gearing Long-term loans Secured over fixed assets
from banks and Better return on net profits in
pension funds prosperous times
High interest payments in difficult
times
Word-building
2.5.4 Translate the following words and word-combinations.
 a gear – to gear – gearing adjustment – high gearing – low gearing –
geared investment trust
 to draw – draft – overdraft – drawer – drawee – to withdraw –
withdrawal
 hold - holder – shareholder – stockholder – stakeholder – holding
 debt – debtor – debit – indebtedness
 own – owned – owning – owner – ownership – ownerless
 owe – owing – owed

– 96 –
WATCH OUT: translator’s “false friends”
business – company – firm – enterprise
a. Change the expressions written in bold type by the synonyms from
the box if any.
A to hire help from outside E to promote growth
B to invest in capital resources F to contribute to something
C to enable somebody to do something G returns from
D to replace equipment H to cover the costs
A.: I think we can get down to the text right away.
B.: Very good. Let’s start. On the whole the text suits me quite well, but
there are some points I’d like to clarify.
A.: All right. Shall we go point by point then, in order to (1) permit you
to clarify the matter?
B.: Yes, first comes the difference between the use of the words
“company”, “firm” and “enterprise”.
A.: Most business organisations in Britain and the USA are officially
called “companies”, for instance:
 He works for a company which does not (2) employ outside
workers.
 He works for a firm that is (3) restoring tools at the moment.
Mind that “company” occurs in conversation and informal writing but
“firm” is often used instead. “Firm” is preferable to “company” in any
style when followed by “of”, as in “the firm of L’Oreal”. However,
“firm” is not used as an alternative to “company” in all spheres.
B.: Could you be more specific, please?
A.: For example, “firm” is not used instead of “company” in “film /
television company”. Note also that neither firm nor company is used
of an organization which organizes air travel. This is “airline”.
B.: This does (4) supply me with understanding of the term! Shall we go
on?
A.: Certainly. “Enterprise” is not widely used in the sense of a business
organisation.
 His (5) rewards from business are so small because he has no
enterprise1.

                                                            
1
Предприимчивость.
– 97 –
B.: But sometimes the meaning of it is “a business organisation”, or a
“business concern”.
A.: Exactly. And note the following economic terms: “private enterprise”,
“free enterprise”1.
 The Conservative Party (6) supports private enterprise whereas the
Labour Party favours nationalisation.
 The supporters of free enterprise very often (7) put into the money
or the property used to produce consumer goods or services
with the aim (8) to gain profits.
B.: May I suggest a break now?
A.: No objections.
b. Sum up the information about the notions “company”, “firm” and
“enterprise”.
SUPPORTING MATERIALS
A distinction must be drawn between the words “business” and
“company”. A business is simply an activity. The activity should be
thought of as quite distinct from the person or persons who carry it on –
the two are separate. The person or persons carrying on a business may be
either an individual, several individuals or a company.
However, a confusion is often caused by use of the word “company” to
refer to a business. This is inaccurate.
To confuse the meaning of “business” and “company” can be an
expensive mistake. For example, an individual who wants to sell his
business may put an advertisement in the newspaper which says “company
for sale”. This is inaccurate and will not impress a potential purchaser.
Similarly, a person who buys a defective item from a business owned
by an individual, but who instructs his solicitor to sue “the company”
which sold it to him will confuse his solicitor – this is bound to make the
exercise more expensive!

                                                            
1
Частное предпринимательство, свободное предпринимательство.
– 98 –
2.5.6 A. Use the plan below and the phrases that follow to make a
presentation of a company. Surf the Internet, find supporting
materials and base your presentation on the profile of a real
company.
Greetings Introduction Main Part Conclusion
(Preparing the (Delivering the (Winding-up)
audience) message)
Good First, let me Let us clear first In conclusion … .
morning/ introduce myself; of all over …
afternoon I’m … from … . (e.g the
ladies and organisation
gentlemen! structure / the
general aims /
etc...)
Ladies and I’ll begin by …, The first point to Looking back, … .
gentlemen! then go on to …, make is that … .
and I’ll end with …
Good I stick to the The next point is That’s all I have to
morning/ opinion that no that … . say for the moment.
afternoon! speech can be
entirely bad if it is
short enough. So I
intend to be brief.
Good The core of my However, one or Before closing I’d
morning/ presentation will be two comments like to summarize
afternoon, contained in … . have some the main points
colleagues! validity. again.
Feel free to Initially, … . Thank you for your
interrupt if you attention.
have any questions.
My presentation All this suggests
will take not more that, … .
than 7 minutes as I
intend to be
concise.
… not to mention
…1
                                                            
1
… не говоря уже о …
– 99 –
B. Comment on the presentation given by your colleague. Make use of
the following points and helpful phrases.
Timing
 … The presentation was a bit out of schedule/had an appropriate timing
 to follow the timeline
Lay-out of the presentation
 to have a well-balanced lay-out (structure)
 to be plainly arranged into foreword, the body, conclusion
Manner of presentation
 to show the ability to describe and comment on something (to explain,
summarize and develop the idea)…
 to speak (exceedingly) fluently / to be inarticulate (incoherent)
 to speak in an appropriately formal tone/in a tone sometimes
inappropriate
 (not) to follow the response of the target listeners
 The presenting lecturer was mostly reading from his notes (the slides)
and did not communicate with the listeners
General language ability
 …the wide range of the active does the speaker credit / the limited range
of the active is not to the speaker’s credit
 …the mistakes were quite occasional/ unfortunately rough
 …the speaker shows / can boast of a good (poor, adequate, relevant)
command of the language
 to use helpful phrases (active vocabulary) in a full range
 … the speaker uses effective strategies for delivering the message across
Contents of the presentation
 to give an insight into something
 to be integrated throughout the professional component
 to give relevant information (judgment / detailed description /
recommendations) in various subject-matter areas
 to be discussed with a special bias towards analyzing and evaluating
the relevance of something
 to be too difficult for the target listeners
Use of visuals and slide structure
 … the chosen Power Point techniques (fonts, background, colours,
animation, graphs and charts) make the statements more convincing
 to do something with flick-of-the-eye rapidity
 At a first glance, … .
– 100 –
2.6 DIALOGUE 1
Read and translate the following dialogue:
Types of Securities
A. You see, I’ve found myself in a real predicament … . I cannot make
out the difference between “stocks”, “shares” and “securities”.
B. Oh, really? In a nutshell, in Britain stock is used to refer to all kinds
of securities, including government bonds. The word equity or
equities is also used to describe stocks and shares. The places where
the stocks and shares of listed or quoted companies are bought and
sold are called stock markets or stock exchanges.
A. And I believed that shares are certificates representing part ownership
of the company … .
B. And it is really so. Let’s get this right from the start. Ownership in a
company is divided among stockholders or shareholders. The
original shareholders are the people who started the business, but now
they have sold shares of the profits to outsiders. By selling these
entitlements to share in the profits, the business has been able to raise
new funds.
A. Well this is it, isn’t it? Then everybody can easily buy into the
company.
B. To a certain extent, yes. For public companies the shares or stocks
can be resold on the stock exchange to anyone prepared to pay the
going price. Mind that even the largest company occasionally needs
to issue additional new shares to raise money for especially large
projects.
A. Do you mean that to buy into the company, a shareholder must
purchase shares on the stock exchange.
B. Absolutely right. As a reward for this initial outlay, shareholders
earn a return in two ways. First, the company makes regular dividend
payments, paying out to shareholders that part of the profits that the
company does not wish to re-invest into business. Second, the
shareholders may make capital gains (or losses).
A. So, if you buy company X shares for € 600 each and then everyone
decides its profits and dividends will be unexpectedly high, you may
be able to resell the shares for € 650, making a capital gain of € 50
per share on the transaction. And if the company suffers a loss or goes
bankrupt?
B. The shareholders of the company have limited liability. The most they
can lose is the money they originally spent buying shares.

– 101 –
A. If the company stops trading because it is unable to pay its debts (goes
bankrupt), or has to sell all its assets to repay part of its debts (goes
into liquidation), is there any chance for the shareholders to get at
least part of their money back?
B. It depends. There are common or ordinary shares, and preference
shares or preferred stock. Holders of preference shares receive a
fixed dividend that must be paid before holders of ordinary shares
receive a dividend.
A. I see … . So, holders of preference shares have more chance of getting
some of their capital back in the case of bankruptcy.
B. Yes, they are repaid before other shareholders, but after owners of
bonds and other debts.
A. Bonds? Are they the same as securities? Let me see … . The
dictionary describes securities as “a certificate attesting credit, the
ownership of stocks or bonds, or the right to ownership connected
with tradable derivatives”. Oh, I cant make head or tail of it … .
B. And I know it up and down and sideways. Security indicates either an
ownership position in a corporation (a stock), or a creditor relationship
with a corporation or a governmental body (a bond), or rights to
ownership, such as those, represented by an option, subscription
right or warrant. Thus, bonds guarantee to repay their face value
after a certain number of years and pay a fixed rate of interest to the
bond-holder in the meantime.
A. I suppose that the price written on the share, the nominal value, is
hardly ever the same as the price it is currently being traded on the
stock exchange.
B. There is no arguing that the market price depends on supply and
demand and can change every minute during trading hours. Traders in
stocks quote bid (buying) and offer (selling) prices. The spread or
difference between these prices is their profit.
A. Very reasonable. And what about options? Are they also traded on the
stock exchange?
B. Of course. Actually, it’s a contract giving the holder a right to buy a
designated security (this is a call option) or sell it (this is a put option)
at or within a certain period of time at a specified price.
A. If I’m not mistaken in a number of companies apart from salary an
executive’s compensation package can include share options, the
right to buy the company’s shares at an advantageous price. It’s a kind
of benefits or perks.
B. Exactly. Oh, I must be going. I’ve lost track of time.
A. Thank you very much for helping me to come to grips with the problem.
– 102 –
Task 1. Report the dialogue. Use the following reporting verbs:
 to acknowledge that  to explain that
 to surmise that  to find out if/whether
 to certify that  to guess if/whether
 to point out (that)  to confirm that
Task 2. Work with a partner. Look at the dialogue and discuss what
A. and B. say about the following subjects.
a. the ways to buy into the company
b. difference between ordinary and preferred stocks
c. difference between stocks and bonds
d. difference between securities and derivatives
Task 3. Say it in English:
1) цена покупателя
2) купить долю компании
3) опцион покупателя
4) прирост капитала, прибыль на капитал
5) выплата дивидендов
6) обыкновенная акция
7) нарицательная цена, номинальная стоимость
8) обанкротиться
9) первоначальный платеж /взнос
10) котируемая компания (акции которой зарегистрированы на
фондовой бирже)
11) запрашиваемая цена, цена продавца, цена предложения
12) дополнительные блага, привилегии, льготы
13) привилегированные акции
14) обусловленное уплатой премии право купить или продать цен-
ные бумаги (товар) по установленному курсу и в определенное
время (до определенного момента времени)
15) опцион продавца (на продажу)
16) назначать цену; устанавливать расценки
17) ценные бумаги
18) привилегированное право служащего компании может вклю-
чать право на покупку акции компании по сниженной или фик-
сированной цене
19) разница между ценами покупки и продажи ценных бумаг,
20) фондовая биржа
– 103 –
 21) брит. владелец государственных ценных бумаг; амер. акционер;
пайщик, владелец акции
22) преимущественное право акционера на подписку на вновь эми-
тируемые акции компании, выпускаемые с целью увеличения ее
капитала
23) справиться, одолеть, решительно взяться за решение проблемы
24) приносить прибыль
25) попасть в затруднительное положение
26) выпускать (эмитировать) акции
27) заплатить текущую (действующую) цену
28) продать документ, дающий право на долю в прибылях
29) торгуемый финансовый инструмент
30) свидетельство, дающее своему держателю право купить акции
или облигации компании по определенной цене в течение
определенного периода
Task 4. Use Supporting Materials to continue the dialogue about
securities, financial derivatives and hedging1. Search for
keywords NYSE, AMEX, treasury bonds, gilt-edged securities,
blue-chips, FTSE, LIFFE, futures contracts, forward contracts,
LIBOR, warrant, subscription right in the Internet to find
further information about one of these items. Make use of
helpful phrases from the dialogue above.
Supporting Materials
Although it sounds like it might be the hobby of your neighbor
obsessed with his topiary garden2 full of tall bushes shaped like giraffes
and dinosaurs, hedging is a practice every investor should know about -
there is no arguing that portfolio protection is often just as important as
portfolio appreciation.
The best way to understand hedging is to think of it as insurance.
Hedging occurs almost everywhere, and we see it everyday. For example,
if you buy house insurance, you are hedging yourself against fires, break-
ins, or other unforeseen disasters.
Portfolio managers, individual investors, and corporations use hedging
techniques to reduce their exposure to various risks. In financial markets,
                                                            
1
Хеджирование, хеджевые операции а) (страхование от риска изменения цен путем занятия
на параллельном рынке противоположной позиции).
2
Сад с подстриженными деревьями.
– 104 –
however, hedging becomes more complicated than simply paying an
insurance company a fee every year. Hedging against investment risk
means strategically using instruments in the market to offset the risk of any
adverse price movements. In other words, investors hedge one investment
by making another. Technically, to hedge you would invest in two
securities with negative correlations. Of course, nothing in this world is
free, so you still have to pay for this type of “insurance” in one form or
another.
For the most part, hedging techniques involve using complicated
financial instruments known as derivatives, the most common of which are
options, futures and warrants, whose value derives from and is dependent
on the value of an underlying asset1.
With these instruments you can develop trading strategies where a loss
in one investment is offset by a gain in a derivative. Traders can use
derivatives to hedge or mitigate risk by entering into a derivative contract
whose value moves in the opposite direction to their underlying position
and cancels part or all of it out.
We've been comparing hedging versus insurance, but we should
emphasize that insurance is far more precise than hedging. With insurance,
you are completely compensated for your loss (usually minus a
deductible2). Hedging a portfolio isn't a perfect science and things can go
wrong. Although risk managers are always aiming for “the perfect hedge”,
it is difficult to achieve in practice.
Because risk is an essential element of investing, you should gain a
fairly good awareness of how investors and companies work to protect
themselves.
Many big companies and investment funds will hedge in some form.
Oil companies, for example, might hedge against the price of oil while an
international mutual fund might hedge against fluctuations in foreign-
exchange rates.
There are many specific financial vehicles to accomplish hedging,
including insurance policies, forward contracts, swaps, options, many
types of over-the-counter and derivative products, and perhaps most
popularly, futures contracts.
                                                            
1
Базовый [базисный] актив (ценная бумага, товар, срочный контракт или другой актив, на
покупку или продажу которого выписан опцион, фьючерс или форвард).
2
Франшиза (освобождение страховщика от убытков, не превышающих определенного
процента от страховой оценки); не страхуемый минимум; подлежащий вычету (при
налогообложении: о сумме, которая вычитается из дохода до обложения налогом; также о
сумме, которая вычитается из любых выплат по страховому полису).
– 105 –
DIALOGUE 2
Read and translate the following dialogue:
Mergers, Takeovers & Acquisitions
A. Listen, if shareholders decide on a company’s policy by voting, then
whoever owns the majority of shares in a company can take decisions.
B. Let me see … . Of course, a threat that the company can be taken over
keeps the managements on their toes. By the way, takeover battles are
often fought through the pages of the press.
A. You mean “take-over” bids, don’t you?
B. Yes, an attempt to get control of a public limited company may be
carried out by purchasing, or offering to purchase, the whole or part of
the ordinary shares. And the price is usually well in excess of their
quoted price.
A. Is takeover the only possible situation?
B. No, of course not. I’m sure you have heard the term M&As.
A. Mergers and acquisitions?
B. Yes. We’re not going to get into the nitty-gritty1 of describing the
details, but for now just keep in mind this may be a merger (two
companies join together to form a new one), a takeover or acquisition
(one company buys another one). The latter happens when a company
offers to buy all the shareholders’ shares at a certain price (higher than
the market price) during a limited period of time. This is called a
takeover bid.
A. And if a company tries to buy as many shares as possible on the stock
market, hoping to gain a majority?
B. This is called a raid.
A. Oh, I know that this practice has been under attack in the press, and
some bids have been nothing more than attempts to make a great deal
of money at the expense of the shareholders.
B. But, usually, this is only possible when the company’s assets have
been undervalued by the directors who have allowed them to be
shown in the balance sheet at a figure that is far below their true value.
A. Does gaining control of a company always have a negative meaning?
If, for example, a company’s Board of Directors agrees to a takeover,
and the shareholders agree to sell?
B. Then it becomes a friendly takeover. On the contrary, attempts to
acquire companies in the face of opposition from existing management
are called hostile takeovers. The number of hostile takeovers relative
to friendly takeovers is small: however, drama surrounds them, and
they usually capture the interest of the press and the public.
                                                            
1
Практически важный; будничный, но жизненно необходимый.
– 106 –
A. Aren’t hostile takeovers a mixed blessing?
B. It’s a complicated question. Opponents of hostile takeovers, including
the management of the target company, claim these takeovers are not
in the long-run interests of the stakeholders. The opponents claim that
the “raiders” will sell off assets to pay for the acquisition and severely
cut back on research and development expenditures to conserve cash
and to generate immediate increases in reported earnings.
A. I believe companies have various ways of defending themselves
against a hostile bid. For instance, they can try to find another
company that they prefer to be bought by.
B. May be, may be… . Sometimes the companies choose issuing new
shares at a big discount, which reduces the holding of the company
attempting the takeover, and makes the takeover much more costly.
A. Is it legal?
B. It is. They have the right to do so. You will agree that it is worse when
a proxy fight1 occurs.
A. Wait …. . Proxy is the authority to represent someone else, especially
in voting. If you do something by proxy, you arrange for someone else
to do it for you.
B. Right in every detail. This is the situation when a group of outsiders
try to gain control of a company by persuading existing shareholders
to vote into office a new team of directors.
A. I guess proxy fights are expensive. I know that illegal insider trading
is also part and parcel of the process.
B. Not all trading on information is illegal insider trading. For example,
while dining at a restaurant, you hear the CEO2 of Firm A at the next
table telling the CFO3 that the company's profits will be higher than
expected, and then you buy the stock, you are not guilty of insider
trading unless there was some closer connection between you, the
company, or the company officers.
A. But I guess illegal insider trading would occur if the CEO of Company
A learned (prior to a public announcement) that his company will be
taken over, and bought its shares knowing that the share price would
likely rise. But that will be the subject of another discussion.

                                                            
1
Борьба за доверенности (борьба за контроль над компанией путем привлечения на свою
сторону представителей акционеров, имеющих доверенности на голосование на общем соб-
рании акционеров).
2
Chief Executive Officer – (главный) исполнительный директор (один из руководителей
корпорации, отвечающий за основную часть её текущей деятельности).
3
Chief Financial Officer (главный) финансовый директор; вице-президент корпорации по
финансам, заместитель директора по финансовым вопросам.
– 107 –
Task 1. Report the dialogue. Use the following reporting verbs:
 to conclude  to indicate that
 to suppose that  to mean
 to remark  to assure that
 to support the idea that  to pause
 to answer in the positive  to doubt
 to try to find out  to explain
Task 2. Work with a partner. Look at the dialogue and discuss what
A. and B. say about the following subjects.
a. takeover bids
b. friendly and hostile takeovers
c. acquisitions
d. mergers
e. situations when the company’s assets are shown in the balance
sheet at a figure that is different from their true value
f. proxy fights
g. raids and raiders
Task 3. Say it in English:
1) «налет» (осуществляется в виде массированной скупки акций
компании-жертвы с целью получить контрольный пакет ее акций)
2) приобретение, аквизиция (приобретение контрольного пакета ак-
ций компании)
3) борьба за контроль над компанией с использованием доверен-
ностей на голосование на общем собрании
4) враждебное поглощение (попытка получить контроль над ком-
панией путем скупки ее акций на рынке против воли руководства
или ведущих акционеров этой компании)
5) заинтересованная сторона (любое лицо или группа лиц, имеющих
интерес в компании: акционеры, работники, пользователи отчетности,
поставщики, клиенты, кредиторы, государство, общественность и т.д.)
6) назначенная цена; объявленная цена; прокотированная цена
7) покупка (акций) осведомленным лицом; незаконные операции с
ценными бумагами на основе внутренней информации о деятель-
ности компании-эмитента
8) предложение о поглощении (предложение о покупке контроль-
ного пакета акций, сделанное акционерам поглощаемой компании
другой компанией) /публичная офферта
9) слияние или объединение компаний
10) компания-мишень
– 108 –
11) «фирма-налетчик», компания, потенциально способная поглотить
другие компании
12) проголосовать за привлечение к руководству компанией нового
состава директоров.
Task 4. Use Supporting Materials to continue the talk about M & As.
Surf the Internet for key words IPO (Initial Public Offering),
vertical-backward merger, vertical-forward merger, buyout,
insider trading to find further information. Make use of helpful
phrases from the dialogue above.
Supporting Materials
Insider trading is the trading of a corporation’s stock or other securities
(e.g. bonds or stock options) by individuals with potential access to non-
public information about the company. In most countries, trading by
corporate insiders such as officers, key employees, directors, and large
shareholders may be legal, if this trading is done in a way that does not
take advantage of non-public information. However, the term is frequently
used to refer to a practice in which an insider or a related party trades
based on material non-public information obtained during the performance
of the insider's duties at the corporation, or otherwise in breach of a
fiduciary1 or other relationship of trust and confidence or where the non-
public information was misappropriated from the company.
While “legal” insider trading cannot be based on material non-public
information, some investors believe corporate insiders nonetheless may
have better insights into the health of a corporation (broadly speaking) and
that their trades otherwise convey important information (e.g., about the
pending retirement of an important officer selling shares, greater
commitment to the corporation by officers purchasing shares, etc.)
Illegal insider trading is believed to raise the cost of capital for
securities issuers, thus decreasing overall economic growth. Insider trading
cases may be cases against:
 Corporate officers, directors, and employees who traded the
corporation’s securities after learning of significant, confidential
corporate developments;
 Friends, business associates, family members, and other “tippees” of
such officers, directors, and employees, who traded the securities after
receiving such information;
                                                            
1
Фидуциар, фидуциарий, доверенное лицо, опекун, траст-агент (лицо или учреждение, кото-
рому доверено управление инвестициями или хранение активов другого лица с юридическим
оформлением таких отношений.
– 109 –
 Employees of law, banking, brokerage and printing firms who were
given such information to provide services to the corporation whose
securities they traded;
 Government employees who learned of such information because of
their employment by the government;
 Other persons who misappropriated, and took advantage of, confidential
information from their employers.

2.7 READING FOR CROSS-CULTURAL ASSOCIATIONS

a. Read the text about new product development.
New product development that coordinates efforts across national
markets leads to better products and services, but companies develop
products in different countries in markedly different ways.
Japanese companies, for example, tend to believe much more in getting
new products to market and then gauging the reaction to them. The
product itself may have been developed with reference to observations of
present and potential customers rather than conventional market research.
US companies on the other hand, tend to use more formal market research
methods. And for German companies, product development schedules tend
to be more important.
Clearly, companies decide on different launch strategies for different
categories of products. Toshiba launched the Digital Video Disk (DVD) in
Japan in November 1996, in the US in March 1997 and in Europe in
autumn 1997. However, Intel launched its latest PC chips simultaneously
in all countries.
The launch decision also includes marketing mix decisions. When
Citibank introduced its credit card in the Asia-Pacific region, it launched it
sequentially and tailored the product features for each country while
maintaining its premium positioning. The promotional, pricing and
distribution strategies also differed from country to country.
The introduction of the Internet and Intranets has the potential to
accelerate the process of mining all markets for relevant information and
for features that can be included in new products. Numerous companies
investigate the possibilities of melding product ideas arising from different
countries.

– 110 –
 Both Marks and Spenser, by selling underwear and pensions, and
Virgin, with flights to New York and cans of cola, have seized
opportunities for extending their brand names into new areas. But if you
stretch a brand too far, the name becomes devalued, as some companies
have found to their cost. During the recession, hard-pressed marketing
directors in the food industry offered consumers more choice by adding
new flavours, taking out fat or sugar, or moving from one tried and tested
category, such as confectionery, to an allied one such as soft drinks. It was
a low-risk strategy – it avoided the huge costs of new product development
and offered variation on an existing purchase.
Instead of building its own new products, a company can buy another
company and its established brands. In the past years we have seen a
dramatic flurry of one big company gobbling up another (Nestle absorbed
Rowntree Mackintosh, Philip Morris obtained General Foods, Pfizer
acquired Pharmacia Corporation, etc.). Such acquisitions can be tricky –
the company must be certain that the acquired products blend with its
current products and that the firm has the skills and resources needed to
continue to run the acquired brands profitably.
In recent years, many companies have used “me-too” product
strategies – introducing imitations of successful competing products. Thus
Tandy, Sanyo, Compaq and many others produce IBM-compatible
personal computers. These “clones” sometimes sell for less than half the
price of the IBM models they emulate. Imitation is now fair play for
products ranging from soft drinks to toiletries. Me-too products are often
quicker and less expensive to develop. But the imitating company enters
the market late and must battle a successful, firmly entrenched competitor.
Many companies turn to reviving once-successful brands that are now
dead or dying. Reformulating, repositioning an old brand can cost much
less than creating new brands. Thus Dannon yogurt sales rocketed as a
result of linking it to healthy living; Coca-Cola rejuvenated Fresca by
adding NutraSweet and real fruit juices.

– 111 –
b. Draw a parallel between the practice of new product development
in different countries. Discuss their advantages and disadvantages.
Examples Advantages Disadvantages
the USA Japan Germany Russia

Market research
method

Launch
strategies:

Brand extension

Acquisition

Me-toos

Revival of old
brands

Marketing mix
decisions

– 112 –
2.8 CASE STUDY & ROLE PLAY
The Case
Modern Industrial Equipment (MIE) is a manufacturer of industrial
electrical equipment. In addition to large domestic plants the company has
several wholly-owned subsidiaries abroad. In 19XX the financial
performance of the foreign subsidiaries was good with the exception of the
Taiwan facility, which was losing money. Despite an infusion of $3
million from the parent company the Taipei office reported further
substantial losses. After considerable study, the president of the Taiwan
plant, Mr. Yang, was fired. He was replaced by Henry Tanaka, 38, a
second generation Japanese-American who had formerly been vice-
president of operations at one of the domestic plants. Tanaka was the
youngest person ever to become a MIE president and during his three-year
tenure he had initiated policies, including a managerial reorganization that
had resulted in phenomenal growth.
Tanaka disposed of a part of the assets and inventory in order to offset
liabilities, shut down the manufacturing of heating and cooling equipment,
and introduced a radically new management system. As a result of that
both the vice-president of operations and the plant superintendent resigned.
The middle- and upper-level managers sent a letter to the President of
MIE, James Hill, seriously questioning Tanaka’s policies.
The management of MIE is torn between the need for sweeping
changes to restore the financial soundness of the subsidiary versus the
need to maintain the confidence of the staff. Tanaka is in a difficult
position. On the one hand a number of the problems need to be solved
before any recovery can be achieved. On the other hand, he is replacing a
seemingly popular Chinese national. Tanaka must make some decisions
that are not likely to be readily approved of by his all-Taiwanese staff (he
believes that the reason for the resentment between him and the staff is
partly that he is a Japanese-American). If he develops an antagonistic
relationship between him and his managers, his measures will hardly ever
succeed. Still Tanaka assumes that renewed financial solvency will
outweigh the present difficulties resulting from the reorganization.
Case Analysis
1. Summarise the situation at MIE-Taiwan both before and at the time
Tanaka took over.
2. Write a brief summary of the financial situation at MIE-Taiwan
inherited by Tanaka. Use chart 1.
3. Dwell on Tanaka’s qualifications.
– 113 –
4. Comment upon the position of Tanaka as “outsider”.
5. Consider Chart 3 and elaborate on the stagnant sales trend in heating
and cooling equipment.
6. Sum up the changes in the Organizational Chart of MIE, proposed by
Tanaka. Use Chart 2.
7. Prepare a report on the case.
Chart 1. MIE-Taiwan Balance Sheet (in Thousands of US$)
ASSETS
(as of July 1, 19XX)
Current Assets
Cash 1,610
Short-term securities 222
Receivables 1,620
Inventory 11,830
Prepaid expenses 150
Other assets 140
Total Current Assets 15,572

Fixed Assets (at cost)

Buildings 4, 182
Machinery and equipment 8, 021
Less depreciation (3,212)
Total Fixed Assets 8,991
Other Assets 410
Total Assets 24,973
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities
Accounts payable (trade, usance credit and loans) 11,290
Accounts payable (local) 3,150
Loans and current portion of long-term debt 1, 130
Other current liabilities 130
Total Current Liabilities 15,700
Long-term debt 3, 294
Reserve for depreciation 1, 250
Other reserves 120
Duty payable 110
Other liabilities 129
Shareholders’ equity 4, 370
Total liabilities and equity 24,973
– 114 –
 Chart 2
_________________________________________________________

– 115 –
 Chart 3. MIE-Taiwan Sales by Product Line (All Models)
19XX-19XX (in Thousands of US$)
19X1 19X2 19X3 19X4 19X5 19X6
Fans 689 724 867 928 831 789
Elevators 1,457 1,763 1,847 2,148 1, 658 1,892
Lighting systems 1,408 1,302 1,503 1,429 1,347 1,236
Heating and cooling system 684 992 1.280 1,564 891 726
Total 4, 238 4,781 5,497 6, 069 4, 727 4, 643
Annual growth (in percent) - 12. 15. 10. -22.1 -1.8
Situation
Tanaka’s first action upon being named subsidiary president was to dispose
of a part of the assets and inventory in order to offset liabilities, a course
that had been rejected by his predecessor, Mr. Yang. His second action,
after just one week in Taiwan, was to shut down the manufacturing of
heating and cooling equipment, a decision completely opposed by the all-
Taiwanese staff. This action, resulting in the layoff of eighteen workers and
the reassignment of twelve more, drew considerable heat from the workers.
Tanaka’s third action, after just one month on the job, was to introduce a
radically new management system. This last decision finally outraged the
executives to a point where both the vice-president for operations and the
plant superintendent resigned. The middle- and upper-level managers sent a
letter to the President of MIE, James Hill, expressing their dismay with
Tanaka and seriously questioning his policies. Hill who had worked closely
with a number of the letter’s signatories began himself to wonder whether
Tanaka was maybe moving just a little too fast.

Role-Play 1
a) Act out a policy discussion between James Hill, President, MIE and
Henry Tanaka, President, MIE-Taiwan:
James Hill, President, MIE:
You make sure that Tanaka got a copy of the letter sent to you by Lo and
thirteen others. You are disappointed that the firm had to lose Hu (vice-
president for operations) and Lee (plant superintendent) and Tanaka
couldn’t persuade them otherwise. You understand that the staff in Taiwan
are upset. Morals hasn’t been so hot for some time there, and it seems the
situation has gone from bad to worse and that’s counterproductive. You
wonder if may be Tanaka could hold off a bit on the reorganization as with
– 116 –
all the other changes going on this is not the best thing to take on at the
moment. When Tanaka reorganized at his previous place, it worked fine
because he was not perceived by middle-management as an outsider. But in
Taiwan things are different. Tanaka is making the key decisions, and that’s
what you expect him to do, but he has got to have cooperation if his
decisions are truly to be implemented. You know that in traditional Chinese
companies seniority is regarded very seriously. It is highly unusual to fire a
senior manager, and rarely do lower-level employees resign except in case
where personal honour is at stake. Thus, resignations of Hu and Lee must
be regarded as very serious matters. The appeal to you on the part of
remaining managers must be looked at as rather unprecedented. You do not
take seriously Tanaka’s conclusion that part of the resentment toward him is
because he is Japanese-American. You advise him to make an effort to
communicate, to talk everything out with the staff, to get their advice. You
are sure they know and care a lot about the business.
Make use of the helpful phrases:
 Well, I’m calling for couple of reasons … .
 I’ll get the small matter out of the way first… .
 I see. Well, how are the things there now?
 That may be true, but … .
 I’m not questioning your fiscal policies.
 My personal feeling is that … .
 But you’re not running Taiwan by yourself.
 What does that have to do with it?
 Oh, come on.
 I just hope that you are right and that the attitudes won’t get in the way of
making a profit.
Henry Tanaka, President, MIE-Taiwan:
You saw the copy of the letter sent to Hill by Lo and thirteen others. You
were surprised by the resignations of Hu and Lee. You think that they felt
they had to resign to save face. They didn’t give you much of a chance to
persuade them otherwise because they had their minds made up. You have
got some thing of a rebellion on your hands at the moment. Though you
are sure it’ll pass soon. Once the managers realize that the changes you
want to make are for their own good, there will be some real changes in
attitude. The former President, Yang pleased everybody in the company
for years while driving it to the point of bankruptcy. You are not interested
in alienating the people that you have to work with, but at the same time
– 117 –
you are not trying to win any popularity awards. Certain measures had to
be taken and taken immediately. You took them. Already the company has
current assets in excess of current liabilities. You are sure that you are
resented because you are not Taiwanese. The Chinese don’t like Japanese.
That’s a matter of history. At the same time you are doing what you feel
you have to do to save this subsidiary. And a reshuffle is one of those
measures. But you may have moved a little too fast with reorganization.
As you start to make a profit again, the attitudes will change.
Make use of the helpful phrases:
 What’s up?
 Okay. Next
 Thanks for considering this proposal.
 But I guess … .
 To be honest, James, it’s tough going. In fact … .
 The point is we can’t wait for people to be happy with every decision.
 I’m well aware of that.
 Anyway it doesn’t matter. What matters is that … .

b) Act out a conversation between Hill and Lo concerning his letter

about Tanaka:
C. Lo, Executive Director, Finance Division:
You wrote to James Hill on behalf of the middle- and upper-level
managers at MIE-Taiwan as a last resort. While you understand the need
for sweeping changes for cost-effective reasons, you take issue with two of
Mr.Tanaka’s actions – his decision to halt production of heating and
cooling systems and his reorganization plan. Tanaka’s decision does not
take into consideration a number of factors. One, the decline in sales has
been due chiefly to artificially low prices set by competition (mainly with
Japanese manufacturers) in an attempt to drive MIE-Taiwan out of the
market, under certain conditions MIE-Taiwan could compete in this price
war. Two, layoffs have resulted in depressed morale among the workers on
other assembly lines. Besides you are discouraged by Mr. Tanaka’s
American-style (or Japanese-style) reorganization plan. In your opinion it
is extremely unwise. (1) The plan consolidates sales in one division, and it
may seriously affect the reputation and sales of MIE Taiwan. Under Mr.
Tanaka’s plan, salesmen will sell all MIE products, even those that they
may not be familiar with, a situation that could backfire if the product sold
is not appropriate to the client’s needs. (2) Mr. Tanaka has so far not
– 118 –
appointed the heads of different divisions after the reorganization, which
creates unfair anxiety among the middle- and upper-level managers. (3)
Mr. Tanaka has created his plan without consulting you and your
colleagues and without having any knowledge of the intricacies of doing
business in the Republic of China.
Make use of the helpful phrases:
 Although none of us would argue that … .
 It is clear that … .
 Surely, … is not the only viable solution available to smb.
 The other matter that concerns me is … .
 There are three main problems with it. First, … . Second, … . Third, ….
 We also feel that … .
 I’m sorry to have to bring this matter to your attention, but … .
 Thank you for your time and attention to my plea.
James Hill, President, MIE:
The financial situation in MIE-Taiwan has necessitated a number of
changes designed to increase its profitability. Among the measures
instituted by President Tanaka are partial liquidation, cessation of
manufacturing heating and cooling systems, and managerial
reorganisation. In the past the parent company attempted to be responsive
to local management. Now the strategy has backfired. The head office
cannot allow the subsidiary to continue losing money. Maybe Tanaka has
moved fast in order to try to stem the losses. You disapprove of the fact
that Tanaka’s actions have been interpreted by the local managers as being
totally insensitive to the workers. As a result, a major rebellion is
underway with the security-conscious Chinese fearing for their own jobs.
Still, the subsidiary is surviving on a loan of $3 million from the parent
company and is not at all self-supporting. You try to make them pick up on
the fact that Tanaka is highly regarded as a manager by the parent
company, he obviously works fast and is quite decisive. Even before he
arrived in Taiwan he was already taking rather radical actions and within a
month has already devised a new management system.
Make use of the helpful phrases:
 As you are well aware… .
 I’ll begin with general comment … .
 It is clear that … .
 Don’t be so offensive about it.
 You should treat the man according to his merits.
 I’m sure Mr. Tanaka will rise admirably to the occasion.
– 119 –
c) Act out a conversation between Tanaka and Lo after Tanaka has
talked to Hill:
Henry Tanaka, President, MIE-Taiwan:
You are disappointed that Mr. Lo did not speak to you first before writing
to Mr. Hill. You understand that he is upset, but you are only doing what
you feel you have to do for the company. You do not understand why Lo
calls your style “Japanese-style management” – you are a second-
generation Japanese. You know very little about Japanese management
and barely speak Japanese. You try to talk about the reorganization. You
understand that you may have been a bit hasty in your actions but in the
given situation you felt that you had few options. You are trying to
convince Lo to stay.
Make use of the helpful phrases:
 Won’t you have a seat? I have ordered coffee for both of us if that is
acceptable.
 I’m sorry to hear that … .
 However I feel sure that you will understand that it cannot alter our
attitude to …
C. Lo, Executive Director, Finance Division:
You present the main objections to Tanaka’s plans. You are offering to
resign, telling Tanaka that you can’t accept his way of doing business.
Tanaka’s measures are unnecessary. He is not taking into account the
cultural aspects of the matter, nor is he using sound business tactics.
Tanaka has done nothing to show that he is concerned with the welfare of
the remaining managers, only with balancing his books. Still you
acknowledge that the financial situation is quite serious and demands
immediate handling.
Make use of the helpful phrases:
 Allow me to put my case … .
 I am, of course, not for one moment doubting that you have the full
backing of … .
 There are no circumstances in which I would … .
 Then I am sorry to inform you that … .
Making a Decision
In coming to a decision, consider the following points:
 The role of cultural factor in transnational companies
 The pitfalls of promoting young enterprising managers to high positions.
What other factors should be discussed?
Your decision:
– 120 –
Role-Play 2
Act out a meeting Tanaka has arranged with the executives of MIE-
Taiwan to introduce the management reorganization and to explain
how the new changes will affect personnel:

Henry Tanaka, President, MIE-Taiwan:

You want to see the staff in action before you make a decision who will be
in charge of what division after the reorganization. The resignation of two
top managers does not seem to bother you nor does the fact that the
remain-ing managers are questioning your decisions. You absolutely
believe that you are doing what you need to do and that your mission is not
to get along with your staff, but simply to turn MIE-Taiwan into a
profitable operation.
You determine exactly what the major changes are:
1. Manufacturing is consolidated into one department.
2. The departments previously under the supervision of the Finance
Executive Director, with the exception of accounting, are made
independent departments. This would result in the probable promotion
of the existing directors to executive directors.
3. The duties are more equally distributed across department lines, with
the new departments with executive directors having greater
responsibility.
4. The sales department is consolidated into one unit under the direction
of the Executive Director of Marketing.
You are sure that the result of the proposed reorganization would
probably be a reduction in overhead due to the consolidation of staff
and a greater streamlining of operations.
Make use of the helpful phrases:
 Let’s come to the merits of the matter … .
 I intend to clear out MIE-Taiwan’s Augean stables.
 The floor is yours, Mr. … .
 Now to … .
 It sticks out like a sore thumb.
 I’m afraid it doesn’t fit in with the schemes.
 And in addition I shall personally see to it that … .
 How can this be relevant?
 Only thus the firm will be able to go from strength to strength.
– 121 –
C. Lo, Executive Director, Finance Division:
Mr.Tanaka has created his plan without consulting you, and without
having any knowledge of the intricacies of doing business in the Republic
of China. Since you and your colleagues are all native Chinese with years
of accumulated business experience, you deeply resent his manner of
dealing. The lack of regard for those of you who have served the company
has already resulted in the resignations of Mr. Hu and Mr. Lee, two able
and expert managers. You feel that the situation has become so serious that
it is imperative that something should be done about it.
Make use of the helpful phrases:
 The point is, … .
 You could avoid such embarrassment, of course, by simply consulting
me and my colleagues … .
 If that is the case, we shall … .
 Apparently not.
Director (Purchasing)
Artificially low prices set by competition (mainly with Japanese manu-
facturers) in an attempt to drive MIE-Taiwan out of the market. It is clear
that their profit margin (if any) is small and therefore cannot continue nor
be indicative of the fair market value of the product. If MIE-Taiwan were
to lower their prices substantially, they too could compete in this current
price war.
Make use of the helpful phrases:
 …I assure you,… .
 We can establish, beyond reasonable doubt, that … .
 I don’t think that’s the point.
 I did give it some considerable thought but I came to the conclusion
that … .
Trade Union Leader:
Mr.Tanaka is ignoring hardships placed on laid-off and reassigned
workers, within the factory, these layoffs have resulted in depressed
morale among the workers on other assembly lines. Halting production of
these systems is not the only viable solution available to Mr.Tanaka.

– 122 –
Make use of the helpful phrases:
 Would you not consider such action a little precipitate?
 If that remains the case, sir, … .
 Furthermore… .
Executive Director (Marketing):
In your mind the reorganization plan is unwise because it consolidates
sales in one division. Although this may be more immediately cost
effective, in the long run it may seriously affect the reputation and sales of
MIE Taiwan, since sales of its equipment are dependent upon its sales
force having specialized knowledge of the product they are selling. Under
Mr.Tanaka’s plan, salesmen will sell all MIE products, even those that
they may not be familiar with, a situation that could backfire if the product
sold is not appropriate to the client’s needs.
Make use of the helpful phrases:
 Let me assure you, Mr. Tanaka, that… .
 And we may also have to reconsider … .
 I’ll affirm you that … .
Director (Accounting):
Mr.Tanaka has so far not designated who will be in charge of what
division after the reorganization. This creates unfair anxiety among all of
you, since you do not know whether you are to be promoted, demoted, or
even fired.
Make use of the helpful phrases:
 I feel confident that you will find … .
 We are not warranted in believing … 1.
 Let’s not crowd the mourners2 .
Director (Personnel):
There is no indication from the chart itself that any key staff would lose
their position; in fact it seems that some would be promoted. Furthermore,
the consolidation of sales personnel in one unit does not necessarily
indicate that all salespersons would sell all products, as all other managers
                                                            
1
У нас нет основания полагать… .
2
Давайте не будем торопиться неподобающим образом.
– 123 –
believe. What seems clear is that the problem with the reorganization is
simply that Tanaka has not really endeavoured to communicate why he is
changing the chain of command and now it will really affect the staff.
Make use of the helpful phrases:
 Of course, sir, your reputation goes before you.
 I am certain of one thing, … .
 And another thing, … .
Making a Decision
In coming to a decision, consider the following points:
 The consequences of managerial decisions
 Priorities in reorganization
 The importance of continuity in the chain of command
What other factors should be discussed?
Your decision:

– 124 –
2.9 GRAMMAR BACK UP: The ing-Form & Past Participle

ANTICIPATION
Task 1
Translate the sentences into Russian paying attention to the function
of the ing-forms.

The ing-form as a subject.

1. Avoiding difficulties is not my method.
2. It was no good chasing the insider trader.
3. It’s no use influencing the Board before the shareholders’ meeting.
The ing-form as part of a predicate (to form continuous tenses).
1. The government gives a subsidy to the industry that is suffering
from foreign competition.
2. The terms of payment depend on the countries between which the
trade is taking place.
The ing-form as an attribute.
1. If the call you receive is a direct incoming call you state the name of
your company.
2. They won a convincing margin.
3. The terms of delivery depend on the kinds of goods being traded.
4. A nation must at all times combine devaluation with other effective
measures to balance its economy, resulting in a reasonable level of
employment and low rate of inflation.
5. The WTO has more than 130 members, accounting for 90% of
world trade.
6. During 1982, the dollar rose against other major currencies to its
highest level since the beginning of floating exchange rates in 1973.

– 125 –
 The ing-form as an object.
1. The statistics used in determining a deficit or an excess are non-
perfect.
2. They postponed giving a definite answer.
The ing-form used as a part of Complex Object.
1. I saw him speaking to the manager.
2. I left him making printouts.
3. If she catches you reading the quarterly breakdown of overheads,
she’ll be furious.
The ing-form used as an adverbial modifier of time.
1. While working so hard he still receives all profits.
2. On arriving at the office he realized that the staff were upset.
The ing-form used as an adverbial modifier of cause.
1. Considering the complexity of the problem, the decision was
reached at a rather early date.
2. Having been persuaded by the Sales Manager, Hector Grant
opened up a new export Market in Abraca.
3. Being invited to Hector Grant John Martin, Sales Manager, told him
about the chances of getting a large order in Abraca.
4. Having failed twice I was not at subject.
The ing-form used as an adverbial modifier of manner or attending
circumstances.
1. McEnroe can make an extra profit on this deal, taking a small
commission on the sale of the shoes.
2. We wasted a whole afternoon trying to detail actual expenditure
against budget and the amount spent on travelling and
entertainment.
The ing-form used as an adverbial participle phrase to express time.
1. Having bought a corporate bond, you have bought a portion of a
large loan, and your rights are those of a lender.
2. Having increased sales by almost forty per cent John Martin has had
a very successful year.
– 126 –
Task 2
Translate the sentences into Russian paying attention to the function
of the Past Participle in the sentences.
The Past Participle as an attribute.
1. Protective tariffs make imported products more expensive and
encourage people to buy goods produced in their own country
2. Exporters and importers often prefer the security of payment by
confirmed irrevocable letter of credit when dealing with unknown
firms in distant countries.
3. The main reasons given were the large amount of work
commissioned by the Government.
The Past Participle as part of a predicate (to form the perfect tenses and the
passive voice).
1. John Martin has received an enquiry from the Abracan government.
2. He has been asked to give a quotation to supply office furniture.
3. As he was convinced that it would be the largest single order in the
history of the firm, John Martin informed the boss about it.
Task 3
Familiarize yourself with the text and fill in the following chart with
the italicized words from the text. Consult the Grammar notes below.
Translate the text into Russian. Supply it with the suitable title.
The death of Ambrose Harper, one of the two men who founded the
company Harper & Grant Ltd., causes a crisis in the firm. Harper & Grant
is a private company. It was started originally by Hector Grant's father and
the late Ambrose Harper together. A private company can be formed by
two or more people. They sign a Memorandum of Association, stating the
number of shares they agree to take, and their signature is followed by the
signatures of anyone else, often members of the family, who will also take
shares in the company. In a private company there cannot be more than
fifty members, or shareholders. The authorised capital of Harper & Grant
Ltd was originally 5,000, but the company has grown, and each 1 share is
now worth about 100. Each share carries a vote at a shareholders’ meeting.
Wentworths, a large and successful firm who manufacture mattresses
for beds, own 10% of Harper & Grant shares. Mr. Wentworth senior was a
personal friend of Ambrose Harper. His firm now has an opportunity of
buying some of the shares formerly belonging to Harper. Hector Grant
wants to stop Wentworth getting as many shares as he owns himself for
– 127 –
fear of upsetting the voting power at shareholders’ meetings. If Wentworth
owned fifty-one per cent of the shares they would have a controlling
interest, and would be in a very good position to take over Harper & Grant
completely. This being done, it will become a fully owned subsidiary.
Hector Grant does not want Alfred Wentworth to own too many of the
shares. Having raised a loan, he buys enough of the shares to outvote A.
Wentworth. It is a personal loan. It is also a short-term loan. Obtaining a
loan he does not only have to pay back the money he borrowed, he also
has to pay interest on it: in this case nine per cent, this is the rate of
interest. The bank manager asked for security. He wanted to hold the deeds
of Grant’s house. But a building society lent him money long ago to buy
the property, and every year he repays a proportion of the loan to them,
plus interest. By now, a lot of this loan has been paid back to the building
society. Probably for this reason the bank agreed to a second mortgage. If
Grant could not pay back the loan within the time limit his house would
have to be sold and the first mortgage paid up. Then the remainder would
go to the holder of the second mortgage, in this case, the bank. Very few
banks will give an unsecured loan, one without any security or guarantee
they will get their money back.
Hector Grant has been to hear the reading of Ambrose Harper’s will.
Having been informed about the distribution of Ambrose Harper’s shares,
he summons his nephew Peter, the Production Manager, to talk things over.

The ing-Form
non-perfect perfect Past Participle
active passive active passive
doing being done having having been done
done done

– 128 –
PRACTICE
Ask yourselves these questions when considering the -ing form.

1. When do we use the -ing form?

a. We use the -ing form as a verb (called a participle):
He is building the funds at the moment.
Walking to the counter, I saw a bank teller counting cash.
b. We use the -ing form as an adjective (called a present participle):
I need a console desk. - I need a trading desk.
c. We use the -ing form as a noun (called a gerund):
We had some training.
2. When do we use the Past Participle?
Past Participle has no tense forms, its action either precedes the action of
the main verb or is simultaneous to it.

Exercise 1
Choose the correct form of the participles used as adjectives in the
following sentences.
1. Garcia is a middleman (represented / representing) a newly
independent country.
2. Explain the possible problems (associating / associated) with
countertrade.
3. It’s natural that Coburn will be reluctant to ship $400,000 worth of
gears without first having some assurance they will actually get
(paying / paid).
4. You will agree this is a most (encouraging / encouraged) proposal.
5. An export transaction usually requires a lot of (complicating
complicated) documentation.
6. The price (quoting / quoted) always indicates the terms of delivery.
7. Numerous (specializing / specialized) committees and (working /
worked) groups deal with the individual agreements and other areas.
8. If you are spelling a word to an English-(speaking / spoken) person
on the phone, use the official Post Office alphabetical code.
9. 70 members concluded a deal (covering / covered) more than 95%
of trade in banking, insurance, securities and financial information.
– 129 –
 10. When an investment is made, capital enters a country, enabling it to
import (manufacturing / manufactured) materials to build a new
(manufacturing / manufactured) plant and to pay workers to build it.
11. (Imported / Importing) Japanese cars accounted for almost one-
forth of all cars (selling / sold) in the United States in the early 80s.
12. Mr. Thompson’s (approving / approved) smile let the agent know
that he was one hundred per cent right when he presented the
middleman with a (hand-making / hand-made) briefcase.
13. The sales representative offered the (approving / approved) specs to
the partner.
14. A sentence in which some information is unnecessarily (repeating /
repeated) is (calling / called) redundant.
15. (Giving / given) here are some quotations that are always (sending /
sent) first and thus should be (keeping / kept) ready.
16. I am deeply honoured by the invitation (extending / extended) to me.
17. (Contributing / contributed) to the view of (declining / declined)
competitiveness is the United States deficit in merchandise trade,
especially the imbalance in trade with Japan.
18. Between sixty and fifty per cent of the gains in productivity
(making / made) in the West in the last half-century spring from
better (training / trained) minds, from more research, and more
systematic use of the economy’s brain power.
19. The secretary opened the door to find colonel Usman (standing /
stood) to attention, (waiting / waited) to escort Eduardo to the bank.
20. That position (establishing / established), he went on to check the
bank’s reserves, long-term deposits, overseas commitments, and
(estimating / estimated) oil revenues for the next five years.
2. What form of the participle should be used?
a. Participle I Non-perfect (Active and Passive) (working; being
received) usually denotes an action simultaneous with the action
expressed by the finite verb. It may refer to the present, past or future.

When holding a stock in a Владея акциями компании, вы яв-

company you are part owner of it. ляетесь ее совладельцем.
Not being sold at premium these Так как эти акции продаются по
stocks are called moderate-growth цене не выше номинала, они назы-
stocks. ваются акциями умеренного рос-
та.
– 130 –
 b. Part I Perfect (Active and Passive) – (having liquidated; having been
used) denotes an action prior to the action expressed by the finite verb.

Having required payment by an Потребовав, чтобы платеж был

irrevocable letter of credit they
insured themselves against the
risk of currency exchange.
Having already been informed
about the company profits the
stockholders wished to receive
their proportionate share.
осуществлен безотзывным аккре-
дитивом, они обезопасили себя на
случай риска валютного обмена.
Будучи проинформированными о
прибылях компании, акционеры
пожелали получить причитаю-
щуюся им долю.

Exercise 2
Join each of the following pairs of sentences, using either a present or
a perfect participle. Translate the new sentences into Russian.
Model: She hoped to find a will. She searched it everywhere.
Hoping to find the will, she searched it everywhere

1. I knew that he was poor. I offered to pay his fare.

2. She became tired of my complaints about the plan. She turned it off.
3. She asked me to help. She realised that she couldn’t move it alone.
4. He thought he must have made a mistake somewhere. He went
through his calculations again.
5. She saw that she could trust him absolutely. She gave him a blank
cheque.
6. The government once tried to tax people according to the size of their
houses. They put a tax on windows.
7. They announced the new plan (yesterday). They admitted that it was
the worst economic settlement they’d ever had.
8. I spelled a word to an English-speaking person on the phone. I used
the official Post Office alphabetical code.

Model: The criminal removed all traces of his crime. He left the building.
Having removed all traces of his crime the criminal left the building.
1. He had spent all his money. He decided to go home and ask for a job.
2. They found the money. They began quarrelling about how to divide it.
3. He returned from a business trip. He felt exhausted by his work.

– 131 –
4. Hector Grant was persuaded by the Sales Manager. Hector Grant
opened up a new export Market in Abraca.
5. I failed the exam twice. I agreed that I was not at subject.
6. The manager increased sales by almost twenty per cent. The manager
decided to plough the profit into his business.
7. He was warned about the audit. He prepared the monthly statements
of account.
8. General Mohammed studied the proposal. He invited Eduardo de
Silveira to visit Nigeria as his guest.
3. What forms of participles do we use in the negative meaning?
 If participle I is used in the function of adverbial modifier of cause,
we’ll have the following negative form of the participle:
Not having opened a deposit Не открыв депозитный счет,
account a customer can’t earn any клиент не может получать
interest. проценты.
(= as he didn’t open a deposit account )
 In the function of adverbial modifier of manner we should use Gerund
in the negative meaning.
He left the room without saying a word Он вышел из комнаты, не
to anybody. сказав никому ни слова.

Exercise 3
Choose “not” or “without” in the given sentences. Define the function of
the participles in the sentences.
Model: Without / not having a signature on the payment order we
couldn’t execute payment.
1. Not / without knowing all the details, he couldn’t consult her.
2. Not / without making an exceptionally high profit you won’t be
criticised.
3. Not/ without being guilty he didn’t feel his fault.
4. Not / without having been instructed by the manager of the firm, they
insisted on the reduction of the financial backing of the company.
5. John sat not / without speaking to anybody and looked very worried.
6. You won’t manage to strike a balance not / without participating in
the bank’s money policy committee.
7. Depository institutions can’t work not / without offering their
customers the opportunity to pay recurring bills by telephone.
– 132 –
8. The annual simple interest states how much money the bank will pay
on a deposit at the end of one year not / without compounding.
9. Not / without having their own lorries they couldn’t keep the budget.
10. Not / without having placed the order with the firm, they won’t
receive a quotation to supply office furniture.
11. Not / without having a capacity to produce the order, they refused to
take it in addition to the budgeted turnover.
12. It’s natural that Coburn will be reluctant to ship $400,000 worth of
gears not / without first having some assurance they will get paid.
4. When do we use the perfect participle passive?
having been + past part
It is used when it is necessary to emphasise that the action expressed by
the participle happened before the action expressed by the next verb:
Having been warned about an Так как управляющего предупре-
important visitor the manager дили относительно важного
didn’t leave the office for the посетителя, он весь день не
whole day. покидал офис.

Exercise 4
A
Change the Infinitive in brackets for Participle I or Participle II
(passive). Translate the sentences into Russian.
Model: That was the best advice (to give) by him.
That was the best advice given by him.
He was very kind (to give) advice to me.
He was very kind giving advice to me.
1. Accounts not (to pay) in time are called overdue accounts.
2. I helped him in handling problems (to create) by other departments.
3. Late at night he received an e-mail (to ask) him to come home at once.
4. I saw at once he had a heart attack (to come on).
5. I could hear voices of the kids (to wait for) the bell to ring.
6. They required an irrevocable letter of credit (to confirm) on a London
bank.

– 133 –
7. Peter Wiles wants the Sales Manager John Martin on the Board (to
feel) that the Board is already rather over-weighted with members like
Hector Grant and William Buckhurst.
8. (To be) a master craftsman of the old school, Bob Hardiman could
produce a magnificent piece of furniture.
9. The Rules of Association (to draw up) by Harper & H.G.’s father state
that the qualification holding is only two shares.
10. The (to remain) two hundred and fifty shares were bought, as Hector
Grant feared they would be, by Alfred Wentworth.
B
Change the Infinitive in brackets for Perfect Participle (active or
passive). Translate the sentences into Russian.

Model 1: (To receive) the money he left for London.

Having received the money, he left for London.
1. (To receive) an enquiry from the Abracan government John Martin
decided to wait until the order was definite.
2. (To quote) in local currency they wished to be protected if the
Abracan currency devalued in relation to sterling.
3. (To book) their representative into a hotel, the firm also put a car at
his disposal.
4. (To send) an invoice to the customer, the firm submits an account,
which shows the total amount due at the end of the month.
5. (To receive) long credit from its suppliers any company would like to
give short credit to its customers.

Model 2: (To pay) the money for the goods the seller left for London.
Having been paid the money for the goods, the seller left Rome.

6. (To supply) with goods the firm has become insolvent and cannot
pay.
7. Harper & Grant mainly do business on wholesale terms: (to give
credit), shops or stores can have the goods they want and defer
payment
8. (To provide) with information about the financial situation in the
company, suppliers can judge whether they are a good credit risk.
9. (To pack and mark) the goods were ready for shipment.
10. (To deliver) the order, the export manager requested his assistant to
check prices.
– 134 –
C
Choose and fill in the necessary form of the Participle. Define the
function of the Participle in the sentence. Translate the sentences into
Russian.
1. The following table shows the position of each of the London clearing
banks in August on the date (having indicated / indicated)
2. Show me the catalogues (receiving / received) yesterday.
3. The figures (mentioned / having been mentioned) in his report are
(publishing / published) in this journal.
4. (Having been read / having read) much on this matter he could make
an interesting report.
5. The guarantee (presenting / presented) by the firm is (signed / signing)
by the bank manager.
6. The quality of goods is in accordance with the specification (enclosing
/ enclosed).
7. They were reluctant to fill out the forms (describing / described) the
expenses (made / having made).
8. He didn`t usually utter a word unless (speaking to / spoken to).
9. The meeting of the Board (calling / called) by Jim Gardner two days
later was a particularly strong one.
10. With some show of reluctance I made Tom (requiring/required) promise.
11. She sat (having done / done / doing) nothing at all, neither (reading /
being read) nor (sewing / being sewed).
12. (Having examined/examined) the goods the client signed the bill.
D
Do it in English
1. Не будучи предупрежденным об аудиторской проверке, он не
представил ежеквартальный отчет.
2. Тарифы и субсидии, применяемые в общегосударственном мас-
штабе, важны для обороны страны.
3. Будучи введены, все ограничительные меры держат мировую тор-
говлю в определенных пределах (лимитируют), снижая общее ко-
личество произведенных товаров и услуг.
4. Реанимировав когда-то успешную, но забытую торговую марку,
компания потратила меньше, чем на создание нового продукта.
5. Услышав закрытую информацию о надвигающейся отставке чи-
новника, курирующего продажу акций, они немедленно избави-
лись от своих ценных бумаг.
6. Послав клиенту счет-фактуру, поставщик информирует его об
общей сумме, подлежащей оплате в конце месяца.
– 135 –
5. What do we call misrelated participles?
A participle is considered to belong to the noun/pronoun which precedes it
(which usually, but not necessarily, is the subject of the main verb). If
there is no noun/pronoun in this position the participle is considered to
belong to the subject of the following main verb.
We require an irrevocable letter of Мы требуем аккредитив, под-
credit confirmed on a London bank. твержденный Лондонским банком.
Believing that he is alone, the man Полагая, что он один, мужчина
expressed his thoughts aloud. озвучил свои мысли.
If this principle is disregarded confusion results.
Wrong Correct
Climbing down the tree, one of the As he was climbing down the tree,
branches broke. one of the branches broke
When using this machine it must be When using this machine you must
remembered. remember...

Exercise 5
Correct the sentences with misrelated participles. Sometimes only a
change of order is required.
Model:
Incorrect form:
Reading the letter a second time, the meaning becomes clearer.
Correct form:
When I read the letter a second time, the meaning becomes clearer.
1. When paying by cheque, a bank card should be shown.
2. Misunderstanding the question, the wrong answer was sent in.
3. When driving carelessly it is easy to have an accident.
4. Leaving the cinema, it seemed to him that the film had been
exceptionally bad.
5. Written in large letters they read the words “No entry”.
6. Wondering where to go, an advertisement caught my eye.
7. Falling from such a height, we thought he would never survive.
8. Writing my name in the hotel register, a familiar voice attracted my
attention.
9. Having paid my taxes, the amount left in the bank is hardly worth
mentioning.

– 136 –
10. Weakened by his last illness, I felt sure that another winter in this
country would kill him.
11. Looking through the actual expenditures against the budget, the
amount spent turned out rather high. (about Hector Grant)

6. What is the meaning of the structure to have (get) something done?

have + object + past participle
We use the causative structure to have (get) something done to talk
about something which we arrange for someone else to do for us:
I’m having my account checked Мне сейчас выверяют счет.
at the moment.
Compare:
I’m checking my account at the
moment. Я сейчас выверяю счет.
More examples:
You should understand by now! Вам пора уже понимать! Вам
You have had it explained often достаточно часто это объясняли!
enough!
We now have the problem solved. Теперь проблема у нас решена.
Get this problem solved by them! Пусть они решат эту проблему!
We must treat this as a national Мы это должны рассматривать
emergency issue and must get как вопрос чрезвычайного значе-
this decision reversed. ния для страны и должны до-
биться, чтобы это решение
было изменено.
Wait! We are having entries in Подождите! Нам подсчитывают
our balance sheet calculated. проводки в балансовом отчете.
Exercise 6
A
Complete these sentences with the correct forms of the verbs in brackets if
possible if possible. Translate the sentences into Russian. Follow the model.
Model:
Have you had your statements ……checked…. recently? (to check)
1. Your preliminary desk research sounds dreadful. You ought to have it
… . (rewrite)
2. This Dangerous Goods Note is so important. I’m going to have it … by
an expert. (check)
– 137 –
3. I’d like to have the statistical difference between these sources … by
an entry entitled “Net Errors and Omissions”. (balance)
4. I would like you … upon an increase as well as a decrease in the
nation’s reserves (comment).
5. We can’t take more than a specified amount of money with us when
we travel abroad as the nation is having its invisible trade expenditures
… at the moment. (limit)
6. They are going to have capital for investments abroad … by requiring
government approval for any new foreign investments. (restrict)
7. If other measures are insufficient, a country may have its currency … .
(devalue)
8. Can we get devaluation … with other effective measures to balance the
economy? (combine)
B
Do it in English. Use the construction to have something done in each
sentence.
1. Мы можем добиться, чтобы эти ограничения были отменены?
2. Когда им предоставят эти доверенности?
3. Соединенные Штаты хотели бы, чтобы японцами была введена
пошлина в 6–8 % на запчасти к автомобилям.
4. Мне бы хотелось, чтобы мои распоряжения выполнялись.
5. По поручению Кристофера Торна компании Буш и Грин послали
пару достаточно жестких писем.
6. Им могут отложить платеж до конца месяца.
7. Пусть вам приготовят счет сразу же.
8. Проследите, чтобы документ был напечатан в двух экземплярах.
9. Пусть бухгалтеру-стажеру напомнят о долгах, давно подлежащих
погашению.
10. Импортные автомобили были проверены для них по-отдельности.
11. Когда вам пришлют извещение о доставке?
12. Когда мы приехали, все торговые ограничения были уже сняты.
13. Мы должны рассмотреть этот вопрос в понедельник.
14. Как часто им предоставляют перечень товаров?
15. Мне бы хотелось, чтобы была избрана рабочая группа1 из 3–5
человек для того, чтобы выработать и записать все возможные
аргументы «за» и «против».

                                                            
1
workshop.
– 138 –
7. What participial constructions do the participles build?
a. Complex Object may be found after the verbs to see, to hear, to feel, to
find; to consider, to understand; to want, to wish, to desire. Participle I
(Indefinite Active) or Participle II is used.
In outer office Jane could hear В приемной Джейн могла слышать
her boss speaking on the phone. как ее босс говорит по телефону.
I consider him engaged in this Я считаю, что он замешан в этой
deal. сделке.
After the verbs “to have”, “to get” (only Past Participle is used).
He had the accounts brought. Ему принесли счета.
You can get these figures Эти цифры могут для вас
checked. проверить.
b. Complex Subject is generally rendered into Russian by a complex
sentence.
The stockholders (they) were Было слышно как (они)
heard discussing their basic акционеры обсуждают свои
rights in the corporation. основные права в корпорации.
c. The Absolute Participial Construction is chiefly used in literary
style and is rendered in Russian by means of an adverbial modifier of
time, cause, condition.
The file under “Bills of Lading” Т.к. папка под грифом
being open, we looked into it. «Коносаменты» была открыта,
мы в нее заглянули.
Circumstances permitting, we Если обстоятельства позволят,
shall strike a deal. (condition). мы заключим сделку.
This being done, he occupied Когда с этим было покончено, он
himself with other matters (time) занялся другими вопросами.
It being now pretty late, we Т.к. было довольно поздно, мы
agreed to finish our meeting. согласились закончить встречу.
He turned and went, we, as Он повернулся и вышел; как и
before, following him. прежде, мы последовали за ним.
Greatly increasing sales and Поскольку при нем значительно
improving profits, his advice at вырос объем торговли и
board meetings was invaluable. увеличилась прибыль, его
рекомендации на заседаниях
совета директоров считались
неоценимыми.
– 139 –
Exercise 7
A
Change the given sentences using the verbs in brackets into sentences
with the Complex Object. Mind the verbs “to have” and “to get”.
Model: We heard him … speaking … over the phone. (to speak)
But: You can get these statements … checked … . (to check)
1. We could hear John Martin … with Peter Wiles an article about the
discovery of oil in Abraca. (to discuss)
2. Businessmen consider him actively … with the project. (to involve)
3. That morning we found a Transport Manager Bruce Hill … a load of
office desks and chairs for a new liner in Scotland. (to see off)
4. He saw Mrs. Margaret Wiles, who rarely attended Board meetings, …
among the Board members. (to sit)
5. At the Board meeting the directors had budgeting control … .
(to discuss)
6. The company has quarterly accounts … every three months in a
financial year. (to draw up)
7. Peter watched Christopher … invoices in the Accounts Department.
(to study)
8. It is difficult to get the lorries fully … , and you’ve got to calculate
depreciation. (to employ)
9. I stopped talking and observed the auditors … the building. (to leave)
10. You can have a mahogany desk … by Bob Hardiman, who is a master
craftsman of the old school. (to make)
B
Paraphrase these sentences using the Subjective Participial
Construction. Use the verb in brackets.
Model: She was opening a current account. (to see)
She was seen opening a current account.
1. Hector Grant was giving recommendations to the Sales Manager,
asking him to book accommodation for the representative of the
Ministry of Works. (to see)
2. The Company Secretary William Buckhurst was discussing the
problem of Wentworth & Company with Hector Grant. (to hear)
3. FMA shares listed on the New York Stock Exchange were falling five
and a half points. (to notice)
4. Rosco Heyward was smiling when Alex Vandervoort insisted on
defining reasonable and excessive profit. (to notice)
– 140 –
5. They were discussing an irrevocable letter of credit as a method of
payment. (to hear)
6. The secretary was opening the letter with the enclosed shipping
documents. (to see)
7. The client was speaking over the telephone with the Manager. (to hear)
8. The customs officer was examining the goods. (to notice)
C
Translate the sentences into Russian. Note the Absolute Participial
Construction.

Model:
The professor being ill, the lecture was put off.
Так как профессор был болен, лекция была отложена.
They signed the contract, the delivery to be made on CIF terms.
Они подписали контракт, причем поставка должна была быть на
условиях СИФ.

1. The goods having been unloaded, the workers left the port.
2. There being a hard day, he felt very tired.
3. We are not giving you any particulars, the enclosed letter containing
the necessary information.
4. There being not a single contract from Abraca, Hector Grant
summoned the Sales Manager for an interview.
5. All this having been settled, the bank manager agreed to provide a
personal loan.
6. Judging by the silence nobody being there, he left the office.
7. With Peter being on a business trip, John had to do his work.
8. The negotiations between the American and British representatives
were conducted behind closed doors, measures having been taken that
no correspondent should receive any information.
9. There being no further business, the meeting adjourned.
10. With a buyer from Abraca visiting the factory, his hotel was booked
for him and a car put at his disposal.
11. The contract quantity was 5.000 tons, the sellers having an option to
deliver 2% more or less.
– 141 –
12. The Board Meeting of directors discussed budgetary control with
William Buckhurst having attended a course on the subject.
13. Having a look at the quarterly breakdown of overheads, his
impression of the amount spent was not pleasant.
14. Having increased sales by almost forty per cent, that was a very
successful year for John Martin.
15. Owning so many shares, the election of Alfred Wentworth in the
Board was inevitable.
16. Requiring an irrevocable letter of credit confirmed on a London Bank,
our quotation in local currency was conditional.
17. Not having anything his own way, while Harper was a chairman,
everybody found Hector Grant a clever man and a strong personality.
18. Being rather over-weighted with conservative members, there was the
need for young forward-looking people in the Board.
19. Being responsible for at least one cost centre, the forecast of the
income and expenditure was required from each manager.
Revision
Exercise 1
Find a mistake if any and give the right variant.
1. Requiring goods can’t be shipped at the customer’s request. They
A B C
aren’t available now.
D
2. The price having been mentioned was 5 per cent lower than the
A B
price paid by the previous contract.
C D
3. Even if posting now the letter can’t reach John till Monday.
A B C D
4. He didn’t usually utter a word unless speaking to.
A B C D
5. Being received the required information the sellers sent their order
A B C D
to the buyers.
– 142 –
6. Payment will be executed against cable signing by the captain
A B C
of the vessel.
D
7. The letter having been typed by the typist now should be sent
A B
as soon as it`s ready.
C D
8. We received a letter from the suppliers advised that they are ready
A B
to fulfil the order according to the terms stipulated.
C D
9. I hear him raise a big personal short-term loan. Frankly speaking he
A B C
agreed to offer his business as collateral required.
D
10. But the Western leaders, though forced to give way on some questions,
A
will stick to the policies which have brought about a fallen standard
B C
of living for working people.
D
11. The Civil Service unions, represented more than a half-million
A B
government workers, demanded a 15-percent pay raise.
C D
12 We asked them to write immediately having advised the terms of
A B C D
payment and delivery.

13. If the presented documents comply with the terms of the credit
A
the buyer cannot refuse to pay on the grounds of the goods not
B C
corresponded to the order or contract.
D
– 143 –
Exercise 2
CONTEXT
Read the text below. In most of the lines 3–23 there is one wrong word or
word combination. Some lines, however, are correct.
 If a line is correct, put a tick () in the space in the right-hand column.
 If there is a mistake in the line, circle out the mistake and write the
correct word in the right-hand column.
1 When we say working capital, we are referring to the net ()
2 working capital. Firm’s investment in current assets called is called
3 gross working capital. The different between current
4 assets and current liabilities is called net working capital.
5 Net working capital can be positive or negative. When
6 current assets are in excess of current liabilities, net
7 working capital is positive. On the other hand, when
8 current liabilities exceed current assets, net working capital
9 is negative.
10 Gross working capital indicates firm’s investment and
11 financing of current assets. Net working capital, on the
12 other hand, shows the liquidity of a firm. As the result, net
13 working capital indicates the financing needs of a firm,
14 both through long-term and short-term financing sources.
15 Working capital is the part of firm’s capital that is used for
16 routine day-to-day business operations. In other words,
17 working capital refers to the funds needed by the business
18 to run its operations for one accounting year. Working
19 capital reflects the amount of money a firm has at its
20 immediate disposal.
21 Adequate working capital is important for any business
22 operations. Working capital financing, however, can be a
23 challenge for a business, especially for a small firm. In
24 order to understand the best way to finance working
25 capital, it is important to understand the difference between
26 the two types of working capital: permanent working
27 capital and temporary working capital

– 144 –
 Writing Essays
Write a 200-word opinion essay according to the following plan.
 make an introduction (state the problem)
 express your personal opinion and give 2–3 reasons for your opinion
 express an opposing opinion and give 1–2 reasons for this opposing opinion
 explain why you don’t agree with the opposing opinion
 make a conclusion restating your position
Topics for opinion essays
 Small companies largely depend on the size and location of the
business premises
 Small business is the most risk-exposed form of enterprise
 Outside consultants are brought in by all the business entities
 Takeovers are an evil for a company
 All insider traders should be prosecuted
 Preference should be given to companies with limited liability
 Preference should be given to high-geared companies
 To overcome the risk of a takeover a company should have substantial
reserves
Topics for Power Point presentations
1. The profile of a firm
2. Advantages and disadvantages of small businesses.
3. Advantages and disadvantages of corporations
4. Types of businesses. (use 2.4.5)
5. Ways to set up a company in the UK versus the USA
6. The organisational structure of a firm
7. Types of securities: common shares, preferred shares, bonds etc.
8. Financial derivatives
9. The structure of the capital of a company
10. The gearing of the company
11. Ways to overcome the risk of a takeover. (Harper & Grant Ltd.)
12. Mergers, takeovers & acquisitions: IPO (Initial Public Offering), vertical-
backward merger, vertical-forward merger, buyout, insider trading
13. New product development: cross-cultural analyses
14. A brief summary of the financial situation at MIE-Taiwan
15. The situation at MIE-Taiwan before Tanaka took over the company
16. The situation at MIE-Taiwan after Tanaka started restructuring.
17. The changes in the Organizational Chart of MIE, proposed by Tanaka
– 145 –
3 ENVIRONMENT OF ACCOUNTING

AGENDA

3.1 Lead-in Prereading

3.2 Language input Developing vocabulary

3.3 Background information Environment of Accounting

3.4 Comprehension Understanding the accounts

Scanning

3.5 Speaking & Writing Fill-in exercises

Language focus Word-building: related forms

Handling information Financial ratios
Skills Focus Financial Statements

3.6 Dialogue 1 Jobs in Accounting

Dialogue 2 Tax accounting
3.7 Reading for Cross-cultural Activities of Auditor General in
Associations Norway
3.8 Case study & Role play 1 A Difficult Time for
Microcomtec Corporation
3.9 Grammar Back Up Revision

Writing Essays
Topics for Power Point
presentations
– 146 –
3.1 LEAD-IN
Section Overview
In this section you will learn about a process that measures and reports
financial information about businesses and other economic entities to
interested parties.
3.2 LANGUAGE INPUT
account n
 cost account
 syn expenses account
expenses account
syn cost account
operating expenses account
accounts n, pl
accounts receivable
syn receivables
 accounts payable
 syn payables
account v for
accountant n
accounting n бухгалтерский учет; cчетоводство;
 accrual accounting
 accrual basis of
accounting
счет бухгалтерского учета; финансовый
отчет, доклад, сообщение; журнальная
статья в бухгалтерском учете; регистр;
запись финансовой операции
счет издержек; калькуляция
себестоимости, смета
счет расходов (затрат) (статья
бухгалтерского баланса,
отражающая определенные
расходы организации)
счет операционных расходов
госбюджет; бюджет предприятия;
счета; расходы; расчеты; счет
счета к получению; счета
дебиторов; дебиторская
задолженность
счета к оплате; торговые
кредиторы; кредиторская
задолженность
отчитываться в чем-л.; объяснять,
являться причиной; составлять долю;
принимать во внимание; отвечать,
нести ответственность
бухгалтерский работник (общее
название для работников сферы учета,
в т.ч. аудита, финансового управления)
метод учета
 учет методом начисления
 метод начисления
– 147 –
  accounting entity  хозяйствующий (учетный,
отчетный) субъект
(самостоятельный хозяйствующий
субъект (организация), для которого
составляется отдельная финансовая
отчетность)
 accounting estimate  учетная оценка
 accounting income  учетная прибыль (доход)
 accounting period  учетный период
 accounting profit  учетная прибыль
 accounting treatment  порядок учета
 inventory accounting  учет запасов товарно-материальных
ценностей
amortization n перенесение стоимости актива на
готовую продукцию
appraisal n оценка; экспертиза; определение
ценности, определение стоимости
assets n актив (баланса); средства, фонды,
авуары, имущество; имущество
несостоятельного должника; покрытие
 current assets  оборотные активы, оборотные
средства
 fixed assets  внеоборотные активы, основные
 (syn. noncurrent assets) средства
 net assets  чистые активы
 total assets  общая стоимость имущества;
 сумма активов
balance sheet (syn.statement of бухгалтерский баланс, балансовый
financial position) отчет
 balance sheet date  отчетная дата
 off-balance sheet items  забалансовые статьи
benchmark v база (сравнения), эталон, стандарт для
сопоставлений, отправная (контрольная)
точка (производительность корзины
ценных бумаг или иной рыночный индекс,
используемый как база при сравнении
инвестиционных инструментов);
процентная ставка-ориентир, например,
ЛИБОР1
                                                            
1
London Interbank Offered Rate – ставка предложения (продавца) на рынке депозитов.
– 148 –
  benchmark treatment  стандартный порядок учета
cash n  денежные средства
 cash flow  движение денежных средств
 cash flow statement  отчет о движении денежных
средств
 cash inflow  поступление денежных средств
 cash on hand  касса
 cash outflow  выбытие денежных средств
 cash payment  денежные платежи
 cash proceeds  поступление денег
conform v (to something) согласоваться, соответствовать,
подчиняться
consistency n последовательность (принцип бухучета)
consolidation n сведение
consolidated financial  сводные финансовые ведомости
statements
сost n стоимость, цена
сosts n, pl расходы, издержки, затраты
 cost accounting калькулирование себестоимости
(стоимости), учет издержек (затрат)
(раздел бухгалтерского учета,
связанный с регистрацией, классифика-
цией, суммированием и распределением
текущих и ожидаемых затрат
материалов, труда и накладных
расходов производства)
 cost control  контроль за уровнем издержек
 cost method  метод учета по себестоимости
 cost of goods sold  себестоимость продаж
 costs and revenues  расходы и доходы
credit n кредит (правая сторона бухгалтерского
счета или учетной книги; в активных
счетах – расход, расходование денежных
средств, материалов, списание из запасов
готовой продукции, списание накопленных
затрат со счета незавершенного производ-
ства и т.п.; в пассивных – поступление,
привлечение дополнительного акционерного
капитала или получение новых кредитов,
получение прибыли и т.п.; в банковском
– 149 –
 учете отражает зачисление средств на
счет клиента); долг; аккредитив
allocate (allot, allow, give, выделять (предоставлять) кредит
grant, supply, provide, extend) (кому-либо или на что-либо)
a credit
depreciation n износ, моральный и физический; 
амортизация; обесценение
dual adj двойственный, двойной
dual-aspect двойной аспект, правило
двойственности (принцип, согласно
которому каждый факт
хозяйственной жизни дает
основание для проведения как
дебетовой, так и кредитовой записи
на счетах бухгалтерского учета)
equation n равенство
 accounting equation бухгалтерская сбалансированность;
бухгалтерское тождество
equity n акционерный капитал, собственный
капитал
 owner’s equity  собственный капитал
 shareholders’ equity  акционерный капитал
(syn. stockholders’ equity)
estate n имущество; собственность
 real estate недвижимость, недвижимое
имущество
feedback n обратная связь, связь с потребителями,
информация от потребителей
fairness n честность, справедливость, законность
historical adj относящийся к прошлому;
первоначальный
 historical cost  фактическая стоимость;
первоначальная стоимость;
стоимость приобретения

– 150 –

 historical cost system
incur v
 incur expenses
liability n
 accrued liabilities
 current liability
 fixed liability
 total liabilities
pertain v (to)
rate n
rate n of return
retain v
retained earnings
statement of retained earnings
solvency n
surrender v
statement n
statement of changes in отчет об изменениях в финансовом
financial position
tangible adj
 intangible adj
trustee n
 система учета по фактической
стоимости приобретения
потерпеть, понести (убытки)
 принять на себя расходы
обязательства, задолженность, пассив
 начисленные обязательства
 краткосрочное обязательство
 долгосрочное обязательство
 общая сумма обязательств
иметь отношение к чему-либо
размер, норма; учетная ставка; ставка
таможенной пошлины; тариф, такса;
курс, цена; пропорция, степень,
процент, коэффициент, показатель;
скорость, темп
норма прибыли, коэффициент
окупаемости капиталовложений
удерживать (прибыль от распределения)
 нераспределенная прибыль
 отчет о нераспределенной
прибыли
платежеспособность
отказываться; передавать, сдавать,
вручать
отчет, баланс (амер.)
положении
материальный
 нематериальный
доверенное лицо
– 151 –
3.2.1 Consult a dictionary and practice the pronunciation of the
following words and word combinations, quote the sentences in
which they are used in the text or submit the examples of your
own:
approximately
consistency
control process
current assets
debtor
dual aspect
entire debt
equation
financial analysts
forecast of the unanticipated events
implementation
in monetary terms
intangible
investment counsel(l)ors
managerial accounting
mortgage
primary objective
prudence
revenue
routine
tangible
the uses are varied
to compare the consequences
to control equipment
to harmonize with
to implement
to indicate targets
to induce
to pertain to
various segments of organization

– 152 –
3.2.2 Match the English word combinations in the left-hand column
with the Russian equivalents in the right-hand column:
1. to accomplish objectives A утвержденный бюджет
2. to generate statements B основа (база) успеха
3. managerial accounting C достигать цели
4. to be encompassed in the D соответствовать определенным
approved budget стандартам
5. to react to unanticipated E нераспределенная прибыль
events
6. to be consistent with overall F реагировать на непредвиденные
goals and objectives события
7. benchmarks of success G снабжать компанию капиталом
8. retained earnings H отчет об изменениях капитала
9. to provide capital to a I вопросы, относящиеся к фирме в
company целом
10. to earn a rate of return on J быть включенным в
one’s capital investment утвержденный бюджет
11. matters pertaining to the K отчет об изменениях в
firm in its entirety финансовом положении
12. to conform to certain L получать норму прибыли на
standards капиталовложения
13. generally accepted M не противоречить
accounting principles всеобъемлющим целям и
(GAAP) стремлениям
14. going concern N отчет о прибылях и убытках
15. Securities and Exchange O общепринятые принципы и
Commission (SEC) правила бухучета
16. income statement P создавать отчеты
17. statement of changes in R комиссия по ценным бумагам и
equity биржам
18. statement of changes in S хозяйственная (коммерческая)
financial position операция
19. business transaction T заинтересованные лица
20. interested parties U коммерческая деятельность
21. approved budget V внешние пользователи
22. business activity W управленческий учет
23 parties external to the X допущениe о непрерывности
organization деятельности предприятия
– 153 –
3.3 BACKGROUND INFORMATION

Environment of Accounting
Accounting is the art of organizing, maintaining, recording, and
analyzing financial activities. Accounting is generally known as the
“language of business”. The accountant translates the accounting
information into meaningful terms that are used by interested parties.
Every organization – profit, nonprofit, charitable, religious, or
governmental – requires the services of accountants in providing
accounting information.
Accountants and the statements they generate are primary source of
information on economic and business activity. Accounting information is
used by everyone. The accountant keeps track of all business transactions.
A business transaction is any business activity that affects what a
business owns or owes as well as the ownership of that business. Most
accounting information is stated in monetary terms and is designed to be
useful in making economic decisions. These decisions are made both
within and outside the firm.
The manager of an organization, who is charged with the responsibility
of seeing that the enterprise is properly directed, relies upon accounting
information provided to make appropriate decisions. The accounting
information specifically prepared to aid managers is called managerial
(management) accounting information. Managerial accounting
information is used in three management functions: a) planning, b)
implementation, c) control.
Planning. Planning is the process of deciding what actions should be
taken in the future. A plan may be made for any segment of the
organization or for the entire organization. An important form of planning
is called budgeting. Budgeting is the process of planning the overall
activity of the organization for a specified period of time, usually a year. A
primary objective of budgeting is to coordinate the separate plans made for
various segments of the organization so as to assure that these plans
harmonize with one another. Planning involves making decisions.
Accounting information is especially useful in the analysis step of the
decision-making process.
Implementation. Making plans does not in itself ensure that the plans
will be implemented. In the case of the annual budget, each manager must
take actions to provide the human and other resources that will be needed
– 154 –
to achieve the planned results. Each manager must also make more
detailed implementation plans than are encompassed in the approved
budget. Although much of this activity is routine, the manager also must
react to unanticipated events, changing previous plans as necessary to
adjust for the new conditions.
Control. It is the managers’ responsibility to see that the work is done,
and done properly, by the employees of the organization. The process the
managers use to assure that the employees perform properly is called
control. Accounting information is used in the control process as a means
of communication, motivation, attention-getting, and appraisal.
The decisions managers make can be classified into four major types:
financing decisions, resource allocation decisions, production decisions
and marketing decisions.
Managerial accounting provides the information for these decisions. In
form, managerial accounting information may be general (for use in long-
range planning) or detailed (for use in cost control). The uses of
managerial accounting information are varied, ranging from decision
making by managers charged with successful operations of the specific
division to which the information relates to planning in both the long and
short range.
For internal use by management, managerial accounting information
generally is narrow in focus. It usually relates to a part of the company’s
operation.
Financial accounting information is intended both for managers and
for the use of parties external to the organization, including shareholders
(and trustees in nonprofit organizations), bankers and other creditors,
government agencies, and the general public. Investors in an enterprise
need information about the financial status and future prospects of an
organization. Bankers and suppliers grant loans and extend credit to
organizations based оn their financial soundness. Even customers and
employees concerned about the condition of an organization make use of
accounting information. The external users of accounting information and
the types of questions for which they seek answers can be classified as:
Stockholders, prospective stockholders in a corporation, and their
advisers – financial analysts and investment counselors. Should an
ownership interest be acquired in this firm? Or, if one is now held, should
it be increased, decreased, or retained at its present level? Has the firm
earned satisfactory profits?

– 155 –
 Creditors and lenders. Should a loan be granted to the firm? Will the
firm be able to pay its debts as they become due?
Employees and their unions. Does the firm have an ability to pay
increased wages? Is the firm financially able to provide permanent
employment?
Customers. Is this firm offering desirable goods and services at
reasonable prices? Will the firm survive to honor its product warranties?
Governmental units. Is a public utility earning a fair rate of return on
its capital investments? Can a firm install costly pollution control
equipment and remain profitable?
Besides keeping track of accounting information the accountant is also
called upon to prepare various reports. There are three basic reports that
the business organization uses on a regular basis: income statement,
statement of capital and balance sheet.
Financial statements provide information on a firm’s financial
condition (or position), on changes in this position, and on results of
operations (profitability). All businesses maintain records based on an
accounting period of 12 months that follows either the calendar year or
any other complete 12-month period known as fiscal year. Many
companies publish these statements in an annual report. This report also
contains the auditor’s opinion as to the fairness of the financial statements.
In addition the accountant may be called upon to prepare financial
statements, known as interim reports, for a period of time less than a
complete accounting period.
Financial accounting information generally relates to the firm as a
whole, since outsiders can make decisions only on matters pertaining to
the firm in its entirety, such as whether to extend credit to it. Such
information, usually historical, is a report upon what has happened.
Because interfirm comparisons are often made, the information supplied
must conform to certain standards. In the USA there are Generally
Accepted Accounting Principles (US GAAP). In most of the rest of the
world there are International Financial Reporting Standards (IFRS). There
is a basic similarity of GAAP throughout the world though in some respect
they may differ from country to country.

– 156 –
3.4 COMPREHENSION
Understanding the reading
3.4.1 Give extensive answers to the questions. Use the following
expressions to present your answers:
 I presume…  We believe you do understand that…
 I assure you…  We know that…
 Speaking about…  I hazard a remark …
1. What is accounting? Why is it so significant for both organizations
and parties outside the organizations?
2. As per what principle can you classify organizations?
3. What kind of accounting information assists the internal users?
What are its main functions?
4. What is the role of planning in company’s policy?
5. What does budgeting involve? Isn’t it the same as planning?
6. What steps must each manager undertake in order to achieve the
planned results?
7. In what way is accounting information connected with the control
process?
8. What types of decisions do managers usually make?
9. How can managerial accounting information be used?
10. What information do the external users need? What kind of
accounting information is designed for them?
11. What information does an annual report contain?
12. Are the basic concepts and generally accepted accounting
principles the same notion? What are they?
Scanning
3.4.2 Scan the text to determine whether these statements are true (T)
or false (F), and if they are false say why:
1. Accounting involves recording and summarizing an organization’s
transactions and reporting them in the form of financial statements.
2. Accounting is basically similar only for charitable and governmental
organizations, but for-profit organizations keep to their own
accounting rules.
3. Most accounting information is stated in monetary terms and is
designed to be useless in making economic decisions outside the firm.
– 157 –
4. Managerial accounting information specifically prepared to aid
managers is used in different management functions: a) planning, b)
budgeting, c) implementation, d) control, e) decision-making process.
5. The manager must forecast unanticipated events and alter previous
plans if it is indispensable to adjust for the new conditions.
6. The accountants make use of accounting information in the control
process to see that the work is done properly by the employees of the
organization.
7. In most companies, managerial accounting provides the information
for such types of the managerial decisions as financing, resource
allocation, production and marketing ones.
8. As a rule, shareholders, bankers and other internal users need financial
accounting information to find out how well the company is doing.
9. Many companies publish the information provided on a firm’s
financial condition by different financial statements twice a year in a
special report. This report also contains the auditor’s opinion as to the
changes of the financial statements.
10. Accounting information must conform to certain standards in order to
make the process of interfirm comparisons easier.

3.4.3 Scan the text and find the information to complete the following
lists:
1. Managerial accounting information is used by management to:
A ________________________________________________________
B ________________________________________________________
C ________________________________________________________
D _______________________________________________________
E ________________________________________________________

2. The external users of accounting information seek answers to the

following questions:
A ________________________________________________________
B ________________________________________________________
C ________________________________________________________
D _______________________________________________________
E ________________________________________________________

– 158 –
3.4.4 Scan the text and find the English equivalents for the following:
 адаптировать к новым условиям
 бухгалтерский учет
 коммерческая организация
 благотворительное общество
 основная цель
 процесс принятия решений
 реагировать на неожиданные события
 быть включенным в утвержденный бюджет
 вопросы, относящиеся к фирме в целом
 для внутренних и внешних пользователей
 долгосрочное и краткосрочное планирование
 вести учет
 отчет о прибылях и убытках
 отчет об изменениях в финансовом положении
 промежуточный отчет
 аудиторское заключение
 годовой отчет
 отчет о нераспределенной прибыли
 соответствовать определенным стандартам
 информация, относящаяся к предыдущему периоду
отчетности (ретроспективная информация)
 кредиторы и заимодавцы
 быть наделенным ответственностью
 достоверность финансовой отчетности
3.4.5 Develop the following ideas. Make use of the active vocabulary,
given in brackets:
1. Accounting is a system that provides information about the amounts of
different resources used by different organizations.
(to record and analyze financial activities, to translates something into
meaningful terms, to be used by interested parties, to require services, to
generate statements, to keep track of something, business transaction, to be
stated in the monetary form)
2. Implementation, control and planning are management functions.
(to be implemented, to take actions, to achieve the planned results, to make
more detailed implementation plans, to be encompassed in the approved
budget, to be routine, to react to unanticipated events, to adjust for the new
conditions, a means of communication, motivation, attention-getting,
appraisal)
– 159 –
3. Financial accounting information is intended both for managers and for
the use of parties external to the organization.
(to include shareholders, bankers, creditors, general public, government
agencies; to provide capital to a company; to sell one’s shares; to borrow
money; to be sound; a high profitability; to fall due; an external user; ; to
acquire an ownership interest; to earn satisfactory profit; to pay one’s
debts; to pay increased wages; to offer something at reasonable prices; to
earn a fair rate of return on one’s capital investment; to remain profitable)
4. Financial statements provide information on a firm’s financial
condition, on changes in this position, and on profitability.
(to relate to the firm as a whole; to maintain records, an accounting period,
the calendar year, fiscal year, outsiders, to pertain to the firm, to extend
credit to somebody, to conform to certain standards, GAAP, financial
statements, financial condition, profitability, an annual report, to contain
the auditor’s opinion, the fairness of the financial statements)
5. Accounting principles are built on a foundation of a number of basic
concepts.
(to pertain to the firm in its entirety, historical information, interfirm
comparisons, to conform to certain standards, GAAP, IFRS, a basic
similarity, to differ from country to country)

3.5 PRACTICE
Language focus
Word Building
3.5.1 Complete the table with words from the text and related forms.
Put a stress mark in front of the stressed syllable.
Verb Concrete and Nouns for Adjectives Negative
abstract people and adjectives
noun organizations
account (for) accounting
consistent
investment
measure
organized
unmanageable
controlling
profit

– 160 –
3.5.2 a. Read the text, ignoring the missing parts.
Accounting Assumptions and Principles
Accounting principles are built on a foundation of a number of basic
concepts. One of them is known as the consistency principle. Companies
can choose their accounting policies – …(1)… . But in choosing
accounting policies they have to be consistent – which means using the
same methods every year, unless there is a good reason to change a policy.
The policies have to be disclosed to the shareholders in the “Statement of
Accounting Policies” included in the Annual Report.
The historical cost principle states that companies …(2)… and not
their (estimated) current selling price or replacement cost. The current
price is not important if the business is a going concern – a successful
company that will continue to do business – as its assets are not going to
be sold, or …(3)… . Some countries with regular high inflation use
replacement cost accounting, which values all assets at their current
replacement cost – the amount that would have to be paid to replace them
now.
Other accounting principles are as follows. The full-disclosure
principle states that … (4)…. The principle of materiality says that very
small and unimportant amounts do not need to be shown. The principle of
conservatism (prudence) is that …(5)…, you choose the one that is least
likely to overstate or over-estimate assets or income. The objectivity
principle says that accounts should be based on facts and not on personal
opinions or feelings. The revenue recognition principle is that revenue is
recognized in the accounting period in which it is earned. This means the
revenue is recorded … (6)…, not when they are paid for. The matching
principle states that each cost or expense related to revenue earned must be
recorded in the same accounting period as the revenue it helped to earn.
b. Fit the missing parts A-H in the gaps. There is one extra.
A compare profits with those of previous years
B financial reporting must include all significant information
C do not currently need to be replaced
D where different accounting methods are possible
E record the original purchase price of assets
F when a service is provided or goods delivered
G their way of doing their accounts
1 2 3 4 5 6
G
– 161 –
c. When writing accounts and financial statements, accountants have
to follow a number of assumptions, principles and conventions. The
following are the main assumptions used by accountants. Match
them with their definitions.

1. Separate (business) a. a business will continue into the future

entity
2. Time-period b. all financial transactions are in a single
monetary unit or currency.
3. Continuity or c. a business is an accounting unit separate
going concern from its owners, creditors, managers and
their assets.
4. Unit-of-measure d. the economic life of the business can be
divided into (artificial) time periods such as
the financial year, or a quarter of it.

d. Find words or word combinations in the text that mean the

following.

a rule or an idea used for preparing accounts in a

particular country or place
when a company uses the same accounting methods each
year when it reports its results
the price paid for an asset when it was bought, rather
than what it is worth now
cost of buying an asset rather than the price that was paid
for it in the past
a business that is operating and making a profit and will
continue to do so
a rapid rise in prices that damages a country’s economy
the duty of someone in a professional position to inform
customers, shareholders etc about the facts that will
influence their decisions

– 162 –
Skills Focus
Financial Statements
3.5.3 a. Fill in the gaps with the suitable expressions from the box:

A) accruals principle B) balance sheet C) reserves

D) bottom line E) sales revenue F) bank loans
G) gross profit H) share prices I) pre-tax profit
Each year a company produces an annual report with three key sets of
figures: profit and loss account, ___(1)____ and cashflow statement. These
are three key financial statements in financial reporting. They give the
basic information about a company’s financial results. The results a
company publishes can affect____(2)___: good results cause prices to rise,
if the market believes the company is undervalued. However, poor results
often cause a drop in share price, as investors feel the company is
overvalued.
The profit and loss (P&L) account (the income statement in the
USA) records the money a company makes or loses during a particular
reporting period, using the accruals principle. The ____(3)____ means that
events in a particular reporting period, for example sales of goods or
purchases of supplies, are recorded in that period, rather that when money
is actually received or paid out: this may happen in a later period.
Accounts record money received from sales (____(4)____, referred to as
turnover on BrE), minus the labour and cost of materials used to produce
them, which is called the cost of goods sold (COGS). The difference
between the sales revenue and the cost of sales is ____(5)____ .
Then selling and general expenses – the cost related to making these
sales – employees’ salaries, rent for buildings, etc. – are taken away.
These other costs and expenses are often grouped together as selling,
general and administrative expenses (SG&A). There is also cost of
depreciation – this is not an actual sum of money paid out, but is shown in
the account to allow for the way that machinery wears out and declines in
value over time and will have to be replaced. This leaves a company with
its operating profit.
Then we subtract the interest payable on money borrowed in the form
of bonds and ____(6)____. This gives the profit before tax or
_____(7)_____. Sometimes there are exceptional items to report, for
example the cost of closing a particular operation. A company pays tax on
– 163 –
its profit, which in the UK is called corporation tax (corporate income tax
in the USA). So, the statement also shows EBITDA (earnings before
interest, tax, depreciation and amortization) and EBIT (earnings before
interest and tax). After all the expenses and deductions there is the net
profit, often called the ____(8)____.
Dividends to shareholders (dividends per share) are usually paid to
shareholders from profit after tax, also referred to as earnings. However
dividends may be omitted, passed or skipped when business is bad. Not
all profit is paid out in dividends. Some is kept to invest in future
activities – these are retained earnings, or ____(9)____.
Non-profit organizations such as charities, public universities and
museums produce an income and expenditure account. If they have more
income than expenditure this is called a surplus rather than a profit.
1 2 3 4 5 6 7 8 9

b. Test your knowledge by answering the following questions:

1. What is the name of the accounting report that may show either a net
profit or a net loss for an accounting period?
2. If total revenue exceeds total expenses for an accounting period, what
is the difference called?
3. What expenses are grouped together as SG&A?
4. What is bigger net profit or pre-tax income?
5. Which is less EBIT or EBITDA and why?
c. Give the English equivalents for the following:
 принцип начисления
 выручка от продаж
 себестоимость проданных товаров
 валовая прибыль
 коммерческие, общехозяйственные и административные расходы
 операционная прибыль
 стоимость прекращения определенного вида деятельности
 износ оборудования и амортизация основных фондов
 прибыль до вычета процентов, налогов и амортизационных
отчислений
 стоимость реализованной продукции

– 164 –
d. Match the words in two columns to make expressions and complete
each sentence with the correct expression.
Exceptional expenses
Interest period
Operating profit
Profit and loss items
Reporting payable
Retained account
Selling and general earnings

1. All businesses maintain records based on ____________ of 12

months.
2. The company’s ______________ has increased by 10 per cent this
year.
3. We kept $30.000 from our profits as ________________ to be
transferred to reserves.
4. This year we fortunately didn’t have any _________________ in the
income statement.
5. ____________________ compares the revenue earned for a period of
time with the expenses incurred for the same period.
3.5.4 a. Read the text, give the English equivalents for the words in
brackets, and single out the main items of the income statement.
The purpose of (отчет о прибылях и убытках) (sometimes called the
earnings statement) is to report upon (прибыльность) of a business
organization for a stated period of time. In accounting, profitability is
measured by comparing the revenues generated in a period with the
expenses incurred to produce those (доходы). Revenue is defined as
(приток активов) resulting from the delivery of products or
(предоставление услуг) to customers. Many firms earn their revenues by
selling their customers (материальные товары), such as automobiles,
office equipment, cameras, or paint. Others, called service firms or
businesses, earn their revenues in the form of (вознаграждения или
комиссионные) by rendering various types of services to customers, such
as the fees for the professional services rendered by accountants,
architects, lawyers, or physicians or commissions from the sale of
(страхование жизни, имущества от несчастного случая) or
– 165 –
(недвижимость). Other types of services generate revenues for other
firms – (заработанный процент) by banks and small (кредитные
организации), the premiums received by (страховые компании), the
admissions charged by theatres, or the rents collected by firms
(владеющие) apartment buildings. The revenues earned are measured by
(стоимость активов) customers are willing to surrender for the products
or services received.
Expense is defined as the (жертва) made or the cost incurred
(производить доходы). The expenses incurred can be classified into a
number of categories that differ among firms. Common expense
categories are (заработная плата и жалованье), (коммунальные
услуги) (electricity, gas, oil, telephone, and water), insurance, taxes (both
on property and on income or earnings), supplies used, (реклама), and
interest. Expense is measured by the cost of the assets surrendered or
consumed in serving customers. The process of comparing the revenues
earned with the expenses incurred is referred to as matching. Expenses are
matched against revenues (определить чистый доход). If revenues
(превышать) expenses, net income results. If the reverse is true, the
business is operating at a loss.
In a technical sense, the income statement is subordinate to the
balance sheet. This is because it shows in some detail the items that
collectively (объяснять) most of the period’s net change in only one
balance sheet item, (нераспределенная прибыль). (“Most” excludes
dividends as well as a few relatively unusual retained earnings changes).
Nevertheless, the information on the income statement is regarded by
many to be more important than information on the balance sheet. This is
because the income statement reports the results of operations and
indicates reasons for (прибыльность организации) (or lack thereof).
The importance of the income statement is illustrated by this fact: in
situations where accountants, in recording an event, must choose between
a procedure that (искажать) the balance sheet or one that (искажать)
the income statement, they usually choose not (искажать) the income
statement.
In practice, there is (значительное разнообразие) in the formats
and degree of detail used in income statements. Less detailed income
statements are published in (годовые отчеты корпораций) to their
shareholders. Income statements prepared for the managers of an entity
usually contain more detailed information.

– 166 –
 The heading of a statement must show (1) the entity to which it
relates, (2) the name of the statement, and (3) the time period covered. To
provide the basis for comparison (Комиссия по ценным бумагам и
биржам, США) requires that corporate annual reports contain income
statements for the most recent years and balance sheets as of the end of the
most recent two years.

Illustration 5.1.
PROFF COMPANY
Income Statement
For the Month of July 200X

Service revenues $5700

Expenses:
Wages $2,600
Gas and oil 400
Rent 300
Advertising 200
Utilities 100
Interest 30 3,63
Net income $2,070

Illustration 5.1 (содержать) the statement of the PROFF Company

for the Month of July 20XX. It shows that revenues in the amount of
$5,700 were generated by serving customers. Expenses for the month
(достигать) $3,630, resulting in net income before taxes for the month of
$2,070.
It is easy to determine from (балансовый отчет) and (отчет о
прибылях и убытках) whether the issuing company was a merchandiser
or a manufacturer.

– 167 –
b. Consider the CONSOLIDATED INCOME STATEMENT given
below. Match the English word combinations in the left-hand
column with the Russian equivalents in the right-hand column:
CONSOLIDATED INCOME STATEMENT
For the sixth months ended in June 30, 200X
In EUR thousand

June 30, June 30, Change

in %
200X 200X
1. Revenue a. Совокупный доход
2. Licensing 55,250 100,311 -45 b. Прочее
3. Maintenance 102,323 93,689 9 c. Консолидированная
чистая прибыль
4. Professional 81,503 91,908 -11 d. Стоимость материалов
Services и обслуживания
5. Other 734 1,533 -52 e. Лицензирование
6. Total Revenue 239,810 287,441 -17 f. Прочие операционные
расходы (3)
7. Increase/decrease 2,869 2,058 39 g. Доля меньшинства /
in finished goods доля дочерних
and work in компаний
progress
8. Other operating 40,235 14,646 175 h. Услуги профессио-
income (1) нального характера
9. Expenses i. Дополнительные
расходы
10. Cost of materials -21,871 -25,297 -14 j. Прибыль до
and services налогообложения
11. Personnel -136,252 -137,738 -1 k. Налог на прибыль
expenses
12. Depreciation and -16,036 -15,771 2 l. Общефирменные
amortization (2) расходы
(административные
расходы плюс
расходы на сбыт и
распространение)
13. Other operating -84,820 -87,962 -4 m. Обесценение и
expenses (3) амортизация
нематериальных
активов (2)

– 168 –
14. Total operating -258,979 -266,768 -3 n. Прочая операционная
expenses прибыль (прибыль от
ведения операций) (1)
15. Net financial -1,728 2,747 -163 o. Расходы на содержание
income / expense персонала
16. Extra expenses 0 -20,179 -100 p. Доход
17. Income before 22,207 19,945 11 q. Финансовый
taxes (before-tax доход/расход чистый
income)
18. Taxes -10,437 -9,175 14 r. Расходы (издержки,
затраты)
19. Income after 11,770 10,770 9 s. Увеличение / уменьше-
taxes (after-tax ние количества готовых
income, income изделий и незавершен-
net of tax) ного производства
20. Minority interests 0 0 t. Прибыль после
налогообложения
21. Consolidated net 11,770 10,770 9 u. Эксплуатационные
income расходы

3.5.5 a. Read the text and single out the main items of the balance
sheet.
In the course of operations a corporation needs numerous reports and
statements to provide a permanent record of its financial activities. These
statements and reports are prepared by the corporation’s own staff, and
most are done in a standardized format. The financial position of an
accounting entity as of a specified moment in time is shown by a balance
sheet. In fact, its formal name is statement of financial position. More
specifically, the balance sheet reports the assets and equities and liabilities
(liabilities and owner’s equity) of the entity at the specified moment in
time.
In Illustration 5.2, the assets of the PROFF Company amount to
$35,670.

– 169 –
Illustration 5.2.

PROFF COMPANY
Balance Sheet
July 31, 200X
In dollars
Assets Liabilities & Stockholders’ Equity
Current assets: Current liabilities:
Cash 12,470 Accounts payable 600
Accounts receivable 700 Notes payable 3,000
13,170 3,600
Property, plant and Stockholders’
equipment: equity:
Delivery equipment 20,000 Capital stock 30,000
Office equipment 2,500 Retained earnings 2,070
22,500 32,070
Total assets 35,670 Total liabilities 35,670
and
stockholders’
equity

They consist of current assets of cash and accounts receivable

(amounts due from customers) and property, plant, and equipment
consisting of delivery equipment and office equipment. Current assets
consist of cash and other short-lived assets reasonably expected to be
converted into cash or to be consumed or used up in the operations of the
business within a short period, usually one year. Property, plant, and
equipment refer to relatively long-lived assets that are to be used in the
production or sale of other assets or services rather than being sold.
Liabilities are the debts owed by a firm. Typically, they must be paid at
certain known moments in time. The liabilities of the PROFF Company
are both relatively short-lived current liabilities. They consist of accounts
payable (amounts owed to suppliers) and notes payable (written promises
to pay) totaling $3,600. Other firms may have long-term liabilities on their
balance sheets. Such long-term liabilities could include mortgages or
bonds due in periods beyond one year.
– 170 –
 The PROFF Company is a corporation. It is customary to refer to the
owners’ interest in a corporation as stockholders’ equity. The PROFF
Company’s stockholders’ equity consists of $30,000 paid in for shares of
capital stock and retained earnings (earnings not paid out to stockholders)
of $2,070. The balance sheet heading includes the name of the
organization, the title of the statement, and the date of the statement, also
note that the claims upon or interests in assets equal the assets. Every
transaction affects at least two items and preserves the fundamental
equation: Assets = Liabilities + Stockholders’s equity. The dual-aspect
concept is evident from the fact that the assets listed on the left-hand side
of a balance sheet are equal in total to the liabilities and shareholders’
equity listed on the right-hand side.
Because of the dual-aspect concept, the two sides necessarily add up to
the same total. This equality does not tell anything about the company’s
financial health. The label “balance sheet” can give an impression that
there is something significant about the fact that the two sides balance.
This is not so; the two sides always balance.
An alternative practice is to list assets at the top of the page and to list
liabilities and owner’s equity beneath them. The former format is called
the account form1, and the latter is called the report form2 of balance sheet.
b. Decide whether the following statements are true or false. Account
for your decision:
1. Companies give information about their financial situation in financial
statements. The balance sheet shows the company’s assets – the things
it owns; its liabilities – the money it owes and its revenue at the end of
the reporting period.
2. The balance sheet shows the financial position of the economic entity at
the particular moment in time. So the balance sheet is a status report
rather than a flow report.
3. Property, plant, equipment and cash are long-lived assets.
4. Accounts payable, notes payable, mortgages, bonds are the debts owned
by a firm.
5. The dual-aspect concept means that the assets listed on the left-hand
side of a balance sheet are equal in total to the liabilities and
shareholders’ equity listed on the right-hand side.

                                                            
1
Горизонтальная форма баланса, в которой активы отражаются слева, а пассивы – справа.
2
Вертикальная форма баланса, в которой активы отражаются в верхней части, а обяза-
тельства и собственный капитал – под ними.
– 171 –
c. Test your knowledge by answering the following questions:
1. In the body of a balance sheet, what are the three sections called?
2. Of the two forms of the balance sheet, which form more closely
approximates the accounting equation?
3. How can a balance sheet help the firm to spot areas of financial
weakness and strength?
4. Why do companies record the original purchase price of assets, and not
their (estimated) current selling price or replacement cost?
5. In which systems is replacement cost accounting used?

e. Match the two parts of the sentences:

1. The historical cost principle is that the price paid to buy assets
2. Intangible assets are usually long-term in nature
3. Liabilities are considered to be current liabilities
4. Some things of value are never shown on a balance sheet,
5. When you deduct a company’s liabilities from its assets
a. you are left with shareholders’ funds.
b. and not their current value is recorded in accounts.
c. if the obligation is to be settled within the current accounting period.
d. and lack physical substance.
e. for example, the knowledge and skills of the company’s employees.

1 2 3 4 5

f. Test your ability to assign specific assets to various categories.

Here are 28 specific assets: traveler’s checks, tables, truck, calculator,
computers, lamp, pencils, typing paper, chairs, stationery, wrapping paper,
automobiles, coins, vans, money in bank, light bulbs, desk, correction
fluid, currency, staplers, showcases, folders, removable cartridge,
facsimile, lorry, files, computer disks, overhead projector, shredder.

– 172 –
Place each of these assets under the appropriate specific asset category
heading in the following form:
Cash Furniture and Delivery Office Office
Fixtures equipment equipment supplies

1. What is the difference between office supplies and office equipment?

2. Why is a removable cartridge considered an office supply, even
though it is an integral part of the computer?
3. What type of asset (short-life or long-life) is a supply?
4. What type of asset (short-life or long-life) is a typewriter?
5. What type of asset (short-life or long life) is a computer disk? Why?
g. Place each of these 16 assets in the appropriate column of the
following form:
Cash in bank, office equipment, First National City bonds, patents,
accounts receivables, office supplies, notes receivables (due in 90 days),
building, office machines, furniture and fixtures, mortgage notes
receivables (due in 6 years), store equipment, petty cash, goodwill, factory
supplies, and merchandise.

Current Asset Investment Intangible Asset Plant asset

– 173 –
3.5.6 a. Read the text and supply the prepositions where necessary.
b. Explain the purpose of the financial statements described in
the text.

The purpose of the statement ... retained earnings is to explain the

changes ... retained earnings that occurred ... two balance sheet dates.
Usually, these changes consist ... the addition of net income (or the
deduction of net loss) and the deduction of dividends paid out.
If we assume that the PROFF Company’s net income for August was
$1,500 (revenues ... $5,600 less expenses ... $4,100) and that it declared
and paid dividends ... $1,000. Its statement of retained earning for August
is shown in Illustration 5.3.
Illustration 5.3

PROFF COMPANY
Statement of Retained Earnings
For the Month Ended August 31, 200X
Retained earnings, July 31 $2,070
Add: Net income for August 1,500
$3,570
Less: Dividends 1,000
Retained earnings, August 31 $2,570

Information ... the financing and investing activities of a business may

be helpful ... appraising its continued profitability and solvency. The
income statement, statement ... retained earnings, and balance sheet often
do not provide ready answers ... such questions as: How much cash was
generated ... operations? Why is such a profitable firm only able to pay
such meager dividends? How much money was spent ... plant and
equipment, and where did it come ... ? The statement of changes ...
financial position – the fourth major financial statement – provides
answers ... such questions. It reports the flow of funds ... and ... of a
business and is often called a funds statement or a cash flow statement.
The statement of cash flow is a derived statement ... the sense that it is
usually prepared ... data originally collected for the balance sheet or
income statement.

– 174 –
 Cashflow statement shows money actually coming … and going …
… a company … a particular period: cash inflows and outflows. It
represents a restructuring and a more detailed presentation … entries found
… other statements. The cashflow statement reports actual cash generated
… a point … time, thus avoiding the problem … accruals. Usually, the
cashflow statement breaks down the cash flow and outflow activities …
three broad categories: cash … operating activities, cash … investment
activities and cash … financing activities.
Net cashflow from operations is the money generated … the sales …
the company’s goods or services, minus the money spent … supplies, staff
salaries, etc. … the period.
Net cashflow from investment activities is the result … purchases of
securities in other companies, money received … sales of securities in
other companies, loans made … borrows, loans repaid and loan interest
paid … borrowers, purchase … land, buildings and equipment.
Net cashflow from financing activities is the result of money received
… short-term borrowing, money repaid … short-term borrowing, money
received through issuing new shares and/or bonds … the company,
dividends paid … shareholders.
Adding and subtracting the figures above, the company calculates its
net cash position … the end of the year. Investors check the cashflow
statements to see how the company is obtaining and using its cash – how
much is made … its operations, how much it has raised … new share
issues, etc.
Other names are sometimes used … it, including funds flow statement
and source and application of funds statement.

3.5.7 Say it in English:

Section A
 наступать (об обязательствах), подлежать оплате/выполнению
 оборотные активы
 необоротные активы
 краткосрочные / долгосрочные обязательства
 собственный капитал
 акционерный капитал
 балансовый отчет, баланс (отчет о финансовом положении)
 отчет о прибылях и убытках (отчет о хозяйственной деятельности)
 управленческий / финансовый учет
– 175 –
 кредиторская задолженность, счета к оплате
 счета к получению, счета дебиторов, дебиторская задолженность
 отчет о нераспределенной прибыли
 снабжать компанию капиталом
 соответствовать (подчиняться) определенным стандартам
 общепринятые принципы и правила бухгалтерского учета (США)
 комиссия по ценным бумагам и биржам (США)
 обратная связь, связь с потребителями, информация от потребителей
 внутренние пользователи
 внешние пользователи
 векселя, подлежащие уплате
Section B
Отчет о прибылях и убытках (и связанный с ним отчет о нерас-
пределенной прибыли) является отчетом о движении средств (flow
statement), поскольку объясняет изменения, произошедшие по счету
(changes that occurred in an account) нераспределенной прибыли,
показывая увеличение (доходы) и уменьшение (расходы и диви-
денды) нераспределенной прибыли за отчетный период.
В отчете о прибылях и убытках собирается информация об эко-
номических результатах операционной деятельности за период. Клю-
чевыми понятиями, используемыми при определении (measurement)
прибыли за период, являются учет доходов и увязка (matching) их с
расходами. Доходы учитываются в период осуществления дея-
тельности, приводящей к их получению (например поставка товаров
или оказание услуг), независимо от того, когда производится оплата.
Расходы включают в себя ресурсы, использованные для получения
дохода определенного периода, и средства, потраченные на управ-
ление (administration) фирмой за этот период, также без учета того,
когда были затрачены соответствующие денежные средства. Таким
образом, прибыль за определенный период не прямо связана с
движением денежных средств, ассоциирующихся с проведенными в
этот период операциями. Кроме того, в связи с тем, что отчет о
прибылях и убытках основан на результатах операций, он не несет
информации об инвестиционной и финансовой политике фирмы за
данный период.
Информация о движении денежных средств по операциям, осу-
ществленным за отчетный период, а также об инвестиционной и
финансовой деятельности за этот период предоставляется в отчете о
движении денежных средств.
– 176 –
Section C
Balance Sheet (B/S)
Баланс предприятия – одна из форм финансовой отчетности (Financial
Statements), в которой приводится информация об активах (Assets),
пассивах (Liabilities) и капитале (Capital) предприятия по состоянию
на определенную дату. Закон о компаниях (Companies Act) пред-
писывает определенные формы Баланса (Balance Sheet Formats) и
требует, чтобы он давал правдивое и беспристрастное отражение (true
and fair view) состояния дел компании.
Section D
Balance Sheet Formats
(Формы Баланса предприятия/компании)
В Великобритании Законом о компаниях разрешается представлять
Баланс в двух форматах: горизонтальном (Horizontal Format) и
вертикальном (Vertical Format). Формат Баланса американских кор-
пораций отличается от формата, принятого в Великобритании, тер-
минологией и тем, что в нем вначале приводится информация о наи-
более ликвидных статьях активов (Assets) и привлеченных средств
(Liabilities), а не наоборот, как делается в Великобритании.
Большинство английских компаний предпочитают вертикальный
формат. Из числа других государств – членов ЕС только в Германии
и Италии необходимо представлять Баланс исключительно в гори-
зонтальном формате.
5.5.8 a. What do the following abbreviations stand for?

SEC EBIT A(/)R MU

Ltd GAAP Aud O/H

A=L+C IFRS Bal PFD

A(/)P SAP B/p P/L

COGS A/c B/r PPD

SG&A ACCA Int SE (1)

EBITDA Acct IOU SE(2)

– 177 –
b. Search for keywords net worth, current maturities of long-term debt,
accrued liabilities, deferred income, deferred income taxes, admitted
assets, treasury stock, commitments, contingent liabilities in the
Internet to find further information about one of these items and
report on your findings.
Evaluating the performance of the firm
3.5.9 a. Read the text.
Financial ratios
There are several ways to evaluate the performance of the firm. One
approach is to analyze its financial statements. You can accomplish this in
three ways:
1. study the contents of the income statement and the balance sheet.
2. analyze the statement of cash flows.
3. examine the relationship between income statement and the balance
sheet by engaging in ratio analysis.
The ultimate purpose of analyzing financial statements by these three
procedures is to help managers achieve sound planning. By studying
income and balance sheet statements, managers can spot areas of weakness
in financial operations and take appropriate remedial actions. It is through
the analysis of these statements that mangers can establish a more effective
way of allocating funds and resources. They can also control the future
direction of the firm’s operations and help maximize its wealth.
Ratio analysis allows you to better understand the relationship between
the balance sheet and the income statements. For instance to compute a
firm’s return on investment, you need the total assets figure from the
firm’s balance sheet and the net income form its account statements. In
addition, some ratios can indicate how effectively assets are being used
and whether the liability mix is a good one. Although there are a
substantial number of individual ratios, they are usually lumped into five
manor categories:
Liquidity ratios
Activity ratios
– 178 –
 Debt ratios
Profitability ratios
Market ratios
In essence, liquidity ratios test a firm’s degree of solvency. Two well
known ratios used to measure the liquidity of a firm include the current
and the acid test (quick) ratios.
The current ratio is the relationship between current assets and current
liabilities: current ratio = current ratio/ current liabilities. It roughly
indicates the margin safety available to a firm to meet short term liabilities.
The ratio can vary, depending on the industry and the type of company. A
ratio of 2.0 times may be good for a manufacturing firm, while a ratio of
1.5 may be acceptable for a utility, because of its highly predictable cash
flow and small current liabilities.
By eliminating the less liquid inventory category and concentrating on
assets more easily converted into cash, the acid-test (or quick) ratio
determines whether a firm could meet its creditor obligations if sales were
to drop catastrophically. Acid test is the relationship between the total
amount that a business has in cash in its bank account and owed by
customers and the total amount that it owes to suppliers.
Acid-test ratio = (Current assets – Inventories)/ Current liabilities
Also, it should be pointed out that one clue to a buildup of inventories
is observed when the current ratio increases while the quick ratio remains
unchanged.
Current ratios don’t tell the whole story. We must study a mix. Even
though two firms have the same amount of current assets the one with a
higher concentration in more liquid current asset components like cash and
marketable securities would be in a better liquidity position to meet its
short-term obligations.

b. Search for information about other types of financial ratios and get
ready to report on your findings in class. Supply examples.

– 179 –
c. Which of the financial ratios can be calculated: from the balance
sheet; from the profit and loss account; using both of these
statements?
d. Look at some company’s financial statements. Write a passage and
report on its degree of solvency, profitability and leverage, its
earnings and dividends using financial ratios.
3.5.10
A. Use the plan below and the phrases that follow to make a
presentation on one of the following subjects:
 What is accounting information used for?
 Accounting standards, principles and assumptions.
 Financial statements.
 Major categories of financial ratios.
Greetings Introduction Main Part Conclusion
(Preparing the (Delivering the (Winding-up)
audience) message)
Dear First let me Let us clear first of So, to cut a long
listeners! introduce all over … story short … .
myself; I am ... (e.g the organisation
from ... . structure /the
general aims, etc. .. )
Ladies and I’d like to talk The first point to In conclusion …
gentlemen! about ... . make is that … .
Good morning/ May I venture The next point is Looking
afternoon, to remind you that … . back, … .
colleagues! of ... .
Esteemed Mr. Do you want to I must That’s about all
Chairman, take the emphasize ... . there is to it.
Esteemed questions as we
colleagues! go, or leave
them to the end?
Mr.Chairman, My purpose At this point we This brings me to
Dear here today is (to have to bear in the end of my
colleagues! speak about) … mind ... . presentation.
To go back to my Thank you for
earlier point ... . listening.
Now, to change Before I finish I’d
the subject for a like to run through
moment ... . the main points
once again.
– 180 –
B. Comment on the given presentation. Make use of the following
points and helpful phrases. Do your best so as not to offend the
speaker and to show the positive sides of the presentation rather than
criticise it:
- The timing
 The length of time that the presentation under review is expected to take
was beyond the limit / appropriate / quite acceptable
-The lay-out of the presentation
 The way in which the parts of the presentation are laid out was
justified.
 The presentation is arranged(set out) in an appropriate way
 to be a coherent whole
 Task set is (not) achieved due to (because of the lack of) organisation
and linking devices.
- The manner of presentation
 to be able to get the message across clearly
 the presentation avoids the usual pitfalls of ...
 to encourage feedback
- General language ability
 (not) to impede communication (about mispronouncing and
grammatical errors)
 to have a good (poor, adequate, appropriate) command of the language
 to use helpful phrases (active vocabulary)
 the inaccuracy was quite occasional
 to reveal competence
- The contents of the presentation
 to know the ins and outs of the subject
 to be a good fit
 the speaker wasted time invainly trying to ...
 to streamline the facts
- The use of visuals and slide structure
 …the layout of the slides is clear and the illustrations are helpful …
 to help the audience concentrate on what the lecturer is saying
 the chosen fonts (colour, background, graphs) highlight the layout of the
presentation

– 181 –
3.6 DIALOGUE 1
Read and translate the following interview.
Jobs in Accounting
A. Excuse me, can you help me? It’s common knowledge that that
accounting is an ABC of any business. In practice we should
distinguish between public companies and private companies. What
interests me is whether the difference between a public accountant
and a private accountant is the same? I know that you are an
accountant … .
B. Actually, we are public accountants, meaning we provide accounting
services to other companies. Private accounting refers to the internal
accounting departments you would find in large companies. Not quite
the same thing.
A. Now, that’s interesting. What services do you provide for your
clients?
B. As a matter of fact our company provides three main categories of
service – audit, tax and consulting. I’m in the Audit division. We
review the financial statements that our clients compile and certify that
they are based on generally accepted accounting principles, and that
they are free of what we call material misstatements.
A. So you evaluate the financial statements and the methods used to
develop them. If you find they are in order, then what?
B. We would put in writing what we found, that the financial statements
were audited and appear to fairly represent the financial standing of
the company. The client can then use our opinion to demonstrate the
validity of the financial statements to their stockholders, or to a bank
when seeking a loan.
A. Does that mean that you physically review all of the financial records
of your clients?
B. Not at all. The smaller the client the more likely we are to look at its
individual transactions to see if they were reported correctly. With
large clients we look more for the proper systems and controls. But we
could never look at all of the records of any client. That would be
extremely time consuming and expensive.
A. What’s the toughest part of the job?
B. That’s a good question. Almost every company’s fiscal year ends on
December 31, thus we have an extremely busy season from January to
March. We work very long hours in that stretch sixty hours a week, at
least. However, once the busy season ends we have a liberal vacation
– 182 –
 policy and excellent benefits. So you pay your dues during the winter,
and the rest of the year isn’t so bad.
A. What do you enjoy most about your job?
B. It’s very difficult to put it into a few words, but in short, I work with a
lot of excellent people, both clients and co-workers. I manage several
projects at a time and work with different people and issues on each,
so there’s lots of variety. I enjoy the challenge.
A. What does the term “Big Four” refer to?
B. There are four large public accounting firms that dominate the
industry. These four companies work with almost every large
company in the country in one capacity or another. From an
employee’s standpoint, the Big four firms provide an excellent setting
to learn the business of accounting.
A. There are some stereotypes about accountants. Any comments?
B. The image of accountants as bean-counters hunched over their adding
machines is not accurate at all. As I have already mentioned we work
with such a broad range of clients that we have to have good people
skills. A bean-counter personality wouldn’t last long here.

Task 1. Report the dialogue. Use the following reporting verbs:

 to imply  to make clear that

 to deduce that  to find out if/whether
 to assert that  to enlarge on
 to proceed  to clarify
 to be interested in  to remember

Task 2. Say it in English:

1) общественный (независимый) бухгалтер
2) бухгалтер компании, штатный бухгалтер
3) аудиторский отдел
4) составлять финансовые отчеты
5) основываться на общепризнанных принципах бухгалтерского
учета
6) финансовые неточности
7) финансовое положение (состояние), финансовая позиция компании
8) уплачивать сборы; налоги; пошлины; платить за услуги
9) бухгалтер; счетовод (уничижительное наименование бухгалтеров)
10) существенные искажения.

– 183 –
Task 3. Use Supporting Materials to continue the dialogue about jobs
in accounting and auditing. Make use of helpful phrases from
the dialogue above.
Supporting Materials
Auditing is a complex career, involving many different job
responsibilities. Auditing involves the review, analysis and evaluation of
processes, products, services, systems, organizations and employees.
Auditors assess the accuracy, validity, reliability, verifiability and
timeliness of organizational information, as well as the sources and
processes by which that information is produced. Auditors also inspect an
organization’s internal controls and the extent to which these controls
manage an organization’s risk exposures. Internal controls help prevent the
theft of a company’s assets and, if properly designed and executed, prevent
data manipulation by employees. Among the main objectives of audit are
to report upon the reliability, verifiability, accuracy and timeliness of
information.
There are a few personal characteristics that are important for an
auditor to have. First auditors should posses a strong ethical framework.
Then good communication skills allow auditors to have a rapport with a
variety of employees, managers, directors and external parties. Strong
interpersonal skills are also important, due to the variety of informational
requests. Furthermore, auditors need to be team players, as the scope of the
audit can be fairly large. Finally, “professional skepticism” is an important
trait to have, especially when reviewing a company's internal controls.
The qualities required for bookkeeping are probably accuracy and
concentration, and mathematical ability. Managerial and cost accounting
require analytical ability and mathematical competence. Tax accounting
probably requires a thorough knowledge of tax laws and accounting
combined with a desire to help one’s clients reduce their tax liabilities.
Auditing presumably requires strong analytical and synthetic skills and
honesty.
An accountant should be confident, with a good knowledge of
company finance and legislation, but also approachable and good at
communicating with people.

– 184 –
a. Look at the text above and discuss if the job of an auditor is really
challenging.
b. Match the two parts of sentences below to find out what different
types of accountants do.
1. Bookkeepers A. check the complete accounts before they
are presented to the external auditors and
make sure that the management has
sufficient control over what is going on in
the company.
2. Management B. record transactions in purchase ledgers and
accountants sales ledgers.
3. Internal auditors C. have to verify that a company’s published
financial statements give a true and fair
view of its profit, its assets and liabilities.
4. External auditors D. calculate how much tax an individual or a
company should pay – or try to reduce this
figure.
5. Cost accountants E. analyse the sales figures from different
departments and make decisions about
their future activity.
6. Tax accountants F. work out the real cost of every item the
company makes which means finding a
way to allocate all the overheads to
different products.
c. Produce your own dialogue about auditor’s and accountant’s
responsibilities and useful personality characteristics. Make use of
the underlined helpful phrases from Dialogue 1 and Supporting
Materials. Find answers to the following questions.
 What are an auditor’s responsibilities?
 How can useful personality characteristics for an auditor be defined?
 What particular skills do different kinds of accountants need?
 What kind of qualities does a good accountant need?

– 185 –
DIALOGUE 2
Read and translate the following dialogue:
Tax Accounting

A. Well, Mr. Bawson, let’s go on to resume our yesterday’s conversation.

B. With great pleasure! Could you put me in the picture about tax
accounting? Why has this type of accounting become an important
specialty throughout the world?
A. In the first place I should remind you that almost all individuals and
organizations in the United States are required to compute their tax
liability, complete the necessary forms, and pay the taxes due. Many
features of the American system, both in the imposition and collection
of taxes, have been adopted by other countries. The specialty of tax
accounting has, therefore, developed into one of the most important
branches of accounting throughout the world.
B. Looks like that. And what does tax accounting deal with?
A. It’s simple. As far as tax accounting is concerned, it is the branch of
accounting that involves determining the correct liability – that is, the
amount owed – for taxes, and preparing the necessary tax-return forms.
B. I thought as much. But it’s an open secret that income taxes are a
major concern to businesses as well as individual citizens.
Unfortunately, businessmen themselves often do not understand the
tax laws, and they must therefore depend on the advice of tax
accountants and lawyers. I suppose a tax accountant must have a
thorough knowledge of the tax code of his or her country and of any
divisions within it that have the power to levy, or impose taxes.
A. Precisely so. I won’t deny that in the United States, the federal tax
laws are extremely complex. In addition, many income tax laws in
almost all the states differ from the federal regulations. Some local
governments – New York City, for example, – also levy income taxes
that have their own unique features. It is easy to appreciate the impact
of income taxes on American business when it is realized that many of
the larger corporations pay over 50 percent of their net income to the
federal and state governments in the form of income taxes.
B. Of net income? I guess it’s income remaining after all legal deductions
have been subtracted. And gross income is the sum before deductions.
Is it correct?
– 186 –
A. Yes, it’s absolutely true. No doubt you understand that careful
planning designed to decrease the tax liability to the lowest level is
thus a major concern of business. This planning is made possible by
various provisions in the tax laws that offer alternative methods for
handling particular transactions or accounting procedures. One
alternative may thus have a significant tax advantage over another,
resulting in either a tax saving or a postponement of the tax liability.
B. Oh, I see your point. It’s clear from the above that a business can pay
substantially more taxes than necessary if the wrong financial decision
is made. Can you give any example of such decisions?
A. That’s just what I was going to say. You know among these
potentially significant decisions might be included the form of
business under which to organize, whether or not to set up multiple
corporations, and which accounting methods should be used to deal
with inventory and depreciation. You may be interested to know that
inventory is the sum of tangible property held for sale, in production,
or held for use in the production of goods or services to be sold. Mind,
please, that the term inventory is also used for the process of
determining the number of the various items on hand in the inventory.
B. That’s clear enough. Moreover, I know that for tax as well as
accounting purposes, there are three major forms of business
organization: the individual proprietorship, the partnership, and the
corporation.
A. Right you are. And remember that tax laws vary considerably for each
of these; the major difference, however, is between the corporate form
and the other two. There are also nontax features that must be
evaluated in choosing a form of organization.
B. Sorry to butt in, but what do you mean by nontax features?
A. O.K. Let me enlarge on that. Nontax features are legal considerations,
other than rates of taxation, to which a business is subject. Among
these are limited liability, continuity of existence, and the ease of
raising capital. The owners usually are not liable, or personally
responsible, for the actions of a corporation, since the corporation
enjoys legal status as an individual entity. The corporate structure also
permits the company to continue to exist regardless of changes of
ownership and management. Corporations can also raise capital by
selling shares, known as stock, in the ownership of the company.
B. I see. And what can you say about taxation in the case of both the
individual proprietorship and partnership forms of business?
– 187 –
A. The thing is that income is taxed to the individual proprietors or
partners. The owners of these businesses therefore pay the progressive
income tax rate for individuals on their business income. A
progressive income tax is one that charges a higher rate for higher
earnings. An individual who earns $25,000 a year pays a higher
percentage of his income in taxes than one who earns only $10,000.
B. That’s fair enough. And I’ve heard that corporations, on the other
hand, are subject to a tax on their profits, while the stockholders of a
corporation are also taxed at the individual rates on the dividends they
receive from these profits. We can define dividends as sums of money
paid to the owners - people who own stock in the company - out of the
corporation's earnings. It’s clear, but would you clarify the concept of
double taxation?
A. With pleasure! Firstly I’d like to remind you what a deduction is. As
you are no doubt aware it’s an expense that can be subtracted, or
deducted, from income prior to paying taxes. Tax deductions are used
as incentives for certain kinds of economic behavior. Interest
payments on mortgages, for example, are common deductions that
encourage home-owning and construction. You should know that the
corporation is not allowed a deduction for the dividends it pays out
when its taxable income is computed. This results in double taxation
of the corporation’s income. In certain cases, the double tax is
eliminated or reduced under special provisions of the tax laws.
B. I’d like to interrupt you here because I’ve already read about such
provisions. As far as I remember under one provision, the taxpayer
receives a dividend exemption (income not subject to taxation) up to
$100 for dividends received during the tax year. Another provision
allows a corporation to be taxed as a partnership if it meets the
following requirements for a small business:
1. It is a domestic, rather than a foreign, corporation.
2. It has no more than fifteen stockholders.
3. All the stockholders are different people.
4. No stockholder is a nonresident alien1.
5. There is only one class of stock.
A. I must say that you are knowledgeable enough in this sphere. I would
only add that while the small-business corporation can save a great
deal in taxes by being taxed as a partnership, it keeps the other nontax
                                                            
1
Иностранец-нерезидент.
– 188 –
 advantages, such as limited liability. You see, because a corporation
has status as a legal entity, liability is usually limited to the
corporation itself and does not apply to the owners of the capital stock.
But, unfortunately, I must leave you. Let’s discuss other income-tax
advantages next time.
B. Agreed. I’m very obliged to you for your information.
A. I’m always at your service. To finalize the matter I’d like to add that
the basic accounting procedure for computing income taxes is
relatively simple. The final or estimated tax liability is charged to the
income-taxes expense account and is deducted on the income
statement. The liability is credited1 to the estimated-income-taxes
payable account and is then classified as a current liability on the
statement of financial position. There are, however, accounting
problems that arise in regard to income taxes. These problems result
from differences in the amount of taxable income and the amount of
income reported on the income statement. This may result from the
use of different accounting methods for tax purposes.
Task 1. Report the dialogue. Use the following reporting verbs:
 to remind  to stress
 to deny  to interrupt
 to add  to remark
 to guess  to agree

Task 2. Indicate whether each of the following statements is true (T)

or false (F):
1. Only individual citizens, not businesses, pay income taxes in the
United States.
2. Many larger corporations in the United States pay more than 50
percent of their net income to federal and state governments in the
form of income taxes.
3. No form of organization or method of handling transactions can give
a tax advantage.
4. A corporation enjoys certain nontax advantages over individual
proprietorships or partnerships, such as limited liability, continuity of
existence, and ease of raising capital.

                                                            
1
Отражается по кредиту счета (кредитуется счету).
– 189 –
5. The owners of individual proprietorships and partnerships show the
income from their businesses on their individual tax returns.
6. In a progressive income tax, all earnings are taxed at the same
percentage rate.
7. Corporations may claim a tax deduction for the dividends they pay
out to stockholders.
8. There is no tax advantage available to a small-business type of
corporation.
Task 3. Say it in English:
 налоговый учет
 подсчитывать чью-либо задолженность по налоговым платежам
 обложение налогами и взимание налогов
 бланк налоговой декларации
 облагать налогом, взимать налог
 вычитать все положенные по закону удержания
 валовая прибыль
 положения (оговорки) в налоговом законодательстве
 предлагать альтернативные методы проведения специфических
операций и учетных процедур
 иметь результатом либо сумму, сэкономленную за счет
уменьшения налоговых платежей, либо отсрочку задолженности
по налоговым платежам
 самостоятельный хозяйствующий субъект
 оценивать необлагаемые налогом позиции компании
 непрерывность существования и легкость получения капитала
 получать капитал от продажи акций
 платить ставку прогрессивного подоходного налога для
физических лиц с их дохода от предпринимательской
деятельности
 уплата процентов по закладной (на недвижимое имущество)
 устранять или уменьшать двойной налог
 получить налоговый вычет на сумму полученных дивидендов
 корпорация имеет статус юридического лица
 относить окончательную или оцененную задолженность по
налоговым платежам на счет расходов по подоходным налогам и
вычитать в отчете о прибылях и убытках
 отражать по кредиту счета.
– 190 –
Task 4. Use Supporting Materials to continue the dialogue about tax
accounting. Make use of helpful phrases from the dialogue
above.
Supporting Materials
Some income-tax advantages often encourage the corporate form of
organization. One of these is the possibility of selling the business or
liquidating it; that is, of going out of business and disposing of the assets.
When this occurs, it is possible to obtain long-term capital-gains
treatment. A long-term capital gain is a profit on the sale of a capital asset
that has been owned for a specified period. Long-term capital gains get
preferential tax treatment – that is, half the rate applied to other kinds of
income. Short-term gains – held for less than a specified period – are taxed
as ordinary income. A second possible tax advantage of the corporate
structure is the deferral or postponement of double taxation by simply not
paying dividends. A third is the flexibility that comes from being able to
time the distribution of earnings so that they occur during the years in
which the owners have the lowest tax liability. A fourth advantage is
income splitting. This is a provision of the tax laws that allows the owner
of a corporation to divide dividend payments from the corporation among
members of his family by having each one own some of the stock. A fifth
possible advantage is related to fringe benefits, such as group life
insurance, medical payment plans, and wage continuation plans, that
provide for full or partial payment of wages and salary to the employees
during sickness. Many of these fringe benefits are encouraged in the tax
laws by allowing deferred tax payments.
Specific accounting methods and procedures are required for income
tax purposes. The choice of one method or procedure over the possible
alternatives can lead to a tax advantage.
Some methods of accounting for depreciation offer a tax advantage.
For example, in the declining-balance method, a greater percentage of the
cost of a fixed asset is figured for the earlier years of the life of the asset.
The result is that part of the tax liability is deferred until later years.
There is also a special tax credit for investment in most kinds of
depreciable assets, with the exception of building, that are acquired and
placed in service. This credit was instituted as a means of stimulating new
investment in productive facilities. While there are certain limitations on
applications of the credit, it offers an important opportunity to reduce
taxes.

– 191 –
 There are also different accounting methods for the inventory; that is,
the goods that a business has on hand. They are commonly known by the
strange names of Fifo and Lifo. Fifo stands for first-in, first-out, and it
assumes that the first goods acquired are the first goods sold. Lifo, on the
other hand, stands for last-in, first-out, and it assumes that the costs of the
most recently acquired goods are the same as the costs of the goods sold
during the accounting period. The second of these, the Lifo method, may
be better from a tax standpoint, since this method results in a lower tax
liability in a period of rising prices. Under Lifo, the higher-priced goods
are depreciated in the current accounting period.
A tax advantage also exists for businesses that sell merchandise for
personal use. These sales are often made on the installment basis, with
payments spread over a period of weeks, months, or perhaps even years.
For tax purposes, it is permissible to report the profit from sales during the
years in which the actual payments are made rather than during the year of
the original sale.
A tax advantage is also available to the holders of most depletive
assets – those which are used up, or depleted, over a period of time-like
oil, natural gas, uranium, or coal. The taxpayer who owns assets of this
kind is allowed a deduction on the gross income derived from the asset.
The deduction is known as a depletion allowance; because of the economic
importance of many of the depletive assets, the percentages allowed to the
taxpayers are of great political concern. Some corporations received such a
tax advantage that despite substantial earnings, they were paying almost no
taxes.

Say it in English:
 добиваться режима долгосрочного прироста капитала (прироста
капитальной стоимости)
 получить льготный налоговый режим
 учет износа (учет амортизации)
 отсрочка двойного налогообложения
 дробление дохода (в целях снижения налоговых платежей)
 поощрять (стимулировать) дополнительные выплаты
 допускать отсроченные выплаты налогов
 метод уменьшения остатка
 первое поступление – первый отпуск (ФИФО); учет по методу
ФИФО
– 192 –
 последнее поступление – первый отпуск (ЛИФО); учет по методу
ЛИФО
 с точки зрения обложения налогом
 на основе платежей в рассрочку
 истощимые активы (в процессе добычи, эксплуатации, обычно-
природные ресурсы)
 допускать вычеты (удержания) из валовой прибыли.

3.7 READING FOR CROSS-CULTURAL ASSOCIATIONS

a. Read the text below.
A Brief Summary of the Activities of the Office
of the Auditor General in Norway
The Norwegian Constitution is based on the principle of the separation
of power. The Constitution expresses this by allocating legislative powers
to the Storting (parliament), executive powers to the Government (the
King in Council) and juridical power to the courts of law. One of the
Storting’s duty is to monitor the government and public administration1,
including the central government accounts. The Office of the Auditor
General2 is the Storting’s auditing and regulatory body3 and by means of
its auditing and monitoring work it helps to ensure that the use and
management of central government funds are economically sound and in
compliance with the decisions and intentions of the Storting. The office of
the Auditor General4 was established in 1816.
The office of the Auditor General is a control agency of the Storting
and has an independent role in respect of the public administration. This
means that the office of the Auditor General is to carry out its duties
independently and autonomously and that is alone determines how to
organize and perform its auditing and compliance monitoring duties. The
office of the Auditor General reports the results of its auditing and
compliance monitoring work to the Storting.
In recent years the public has had better access to the work of the office
of the Auditor General. All the documents submitted to the Storting and all
administrative reports are published by the office on its website. The work
                                                            
1
Осуществлять надзор за государственными и общественными организациями.
2
Генеральный аудитор (председатель Счетной палаты).
3
Контрольный и регулирующий орган.
4
Счетная палата.
– 193 –
of the Office of the Auditor General is subject to the terms of the Freedom
of Information Act.
The senior management of the Office of the Auditor General is
composed of a board of five Auditors General appointed by the Storting
for a term of five years. The composition of the Board of Auditors General
reflects the parliamentary composition of the Storting. Although the
Auditors General are elected politically, the Board acts impartially. The
Chairman of the Board is the manager of the Office of the Auditor
General.
The activities of the Office are grouped into seven departments. The
auditing departments carry out three types of auditing: financial auditing,
performance auditing1 and corporate control.
Through its audits and advice the office of the Auditor General shall
verify that the public revenues are paid in as intended and that public funds
and assets are used and administrated in a financially sound way that
complies with the decisions and intentions of the Storting.
The duties ascribed to the Office of the Auditor General include:
– auditing the central government accounts and all accounts rendered
by central government agencies and other authorities liable to render
accounts to the central government, including government corporations,
public administrative bodies that have been granted special powers of
authority, government funds and other bodies or enterprises where this is
stipulated in separate legislation (financial auditing) performing systematic
analyses of the economy, efficiency and effectiveness of the government
administration on the basis of the decisions and intentions of the Storting
(performance auditing);
– monitoring the management of the state’s proprietary interests in
companies, banks etc (corporate control);
– advising the government administration on issues concerning
accounting and financial management.
The Office of the Auditor General shall be objective and neutral in the
performance of its duties. Audits shall be planned, carried out and reported
as prescribed by the relevant legislation, instructions and good auditing
practice in the Office of the Auditor General.

                                                            
1
Контроль финансового состояния и результативности деятельности.
– 194 –
b. Draw a parallel between Norway and Russia to cover the points in
the following chart. Surf the official site of the Account Chamber
of the Russian Federation for necessary information.

Norway Russian
Point (Office of the Federation
Auditor General) (Accounts
Chamber)
What principle is the
foundation of a country’s
Constitution?

Whom does the Office of the

Auditor General report to?

How is the public access to

the work of the Office of the
Auditor General ensured?

What is the organization

structure of the Office of the
Auditor General?
What are three types of
auditing carried our by the
auditing departments?

What duties are ascribed to

the Office of the Auditor
General?

– 195 –
3.8 CASE STUDY& ROLE-PLAY
Case

At the beginning of 2001, particularly in January, Microcomtec

Corporation, a small manufacturer of industrial microcomputers and
application - specific software was having a difficult time competing in
both the domestic and international markets. Actually, sales of its primary
product, the Microcomtec 100 Microcomputer, were slow, and the
company’s profit was practically nonexistent. It was obvious that
Microcomtec was facing a serious financial crisis. In an attempt to save
Microcomtec, its president, Mr. David Robinson, hired an outside
consultant, Ms. Pauline Stanley, a seasoned professional with years of
high-tech marketing experience. After scrutinizing the situation for a
couple of weeks, Ms. Stanley made three recommendations. The first
called for closing down the European sales office in Rotterdam and
concentrating on the U.S. market. The second recommendation was for
Microcomtec to shift from a hardware to software emphasis. Specifically,
Ms. Stanley advised the company to begin manufacturing IBM-compatible
software for general-purpose laboratory/technical uses. The third
recommendation called for Microcomtec to shift its advertising and sales
promotion from heavy reliance on journal advertising and press releases to
direct mail advertising and trade show exhibits. All three conclusions,
though not explicitly critical of the vice-president for sales and
marketing, Mr. Henry Dixon, were implicitly so since Mr. Dixon had
been instrumental in implementing the present marketing strategy. It
was now up to the company to decide whether to risk its remaining
capital on an entirely new direction or stay with the present course,
namely, continuing Mr. Dixon's strategy of industry-specific
hardware/software production.

– 196 –
Case Analysis
Analyse the case step by step.
Step 1. Clarify the Issue

Discussion questions:
1. What does Microcomtec Corporation do?
a) What is its major product?
b) For what market does it manufacture?
c) What are Stanley’s major recommendations?
2. In the background a number of problems with Microcomtec are
mentioned, either directly or indirectly by way of proposed changes.
a) Make a list of these problems.
b) Then write a one-sentence statement describing each problem.

Step 2. Consider exhibits

Exhibit 1

Sales of the Microcomtec 100

Third and Fourth Quarter, 2000 (in US$)

July August September October November December Total

Domestic 38,900 48,600 61,642 54,282 42,623 43,624 289,671

International 31,090 21,438 37,583 21,438 21,438 - 132,987

422,658

– 197 –
Exhibit 2
Microcomtec’s Balance Sheet
as of December 2000
(Actual US$)
ASSETS
Cash 44,190
Accounts receivable:
Trade 209,540
Other 41,800
Inventories:
raw materials 98,070
packaging 24,504
work in progress 3,230
finished goods 107,440
Prepaid expenses 10,756
TOTAL CURRENT ASSETS 539,530
Fixed assets 12,462
less depreciation (4,790)
Net fixed assets 7,672
Other noncurrent 190
TOTAL ASSETS 547,392
LIABILITIES
Notes payable 54,182
Accounts payable:
trade 269,904
current intercompany 82,591
accrued expenses 23,693
accrued taxes 97,330
TOTAL CURRENT LIABILITIES 527,700
Reserves 1,561
Share capital (privately held) 18,131
TOTAL LIABILITIES 547,392
– 198 –
 Discussion questions:
1. Exhibits 1 and 2 show Microcomtec’s financial situation. Judging
from these figures, is Corporation in serious trouble? Support your
answer with specific references to the exhibits.
2. Does exhibit 2 suggest that Stanley’s recommendations will be
adopted by Dixon? Why or why not?
3. Create a graph using Exhibit 1, expressing the domestic and
international sales trends for the third and fourth quarters of 2000.
4. Write a brief summary of the balance sheet using Exhibit 2. Your
analyses should include a comparison between assets and liabilities.
Note that while the total assets and total liabilities are exactly the
same (and must be if a balance sheet is to “balance”), there are a
number of points to compare: total current assets versus total current
liabilities, accounts receivable versus accounts payable, cash versus
notes payable, etc. From your comparison, how would you rate the
financial position in the company?

Step 3
a) Consider the memo from H. Dixon to D. Robinson:
Interoffice Memorandum
To: D. Robinson
Fm: H. Dixon
Re: Direct Mail
Date: Jan. 22, 2001

With underwritten be advised that I contacted the people at Industrial

Collaborative today in an effort to purchase direct mail lists. They claim to
have very vertical lists of primary purchases both in the U.S. and abroad
for materials-testing automation. They are going to sell one list for $1,200
or two for $2,100 (over 1,000 names in each). Names and titles are
included into the lists. I strongly suggest that we should obtain the lists, as
it was recommended by Ms. Stanley. We should also create a direct mail
piece to accompany existing product leaflets. Harvey, from International
Communications Department, promises he can have design and copy in a
matter of some days for a three-page brochure describing our automation
packages. Harvey will phone back later to confirm. Let’s discuss the
matter this afternoon.
– 199 –
b) Create a dialogue between Robinson and Dixon regarding the
above Memo:
R. Henry, it seems as if you’re missing the basic points of Ms.
Stanley’s recommendations.
D. _____________________________________________________
R. I say that because her report explicitly states that we should
abandon these markets and change our direction.
D. _____________________________________________________
R. I know you believe we should give it more time. But, evidently, we
don’t have more time.
D. _____________________________________________________
R. Well, maybe I am making a mistake. But we have to try to get a
product that actually sells.
D. _____________________________________________________

Step 4. Prepare a report on the case. Use the instructions in Unit 1.

– 200 –
Role-Play

Some Points to Keep in Mind

You should keep in mind that business strategies, by their very nature, are
permanently subject to change. Regardless of a company’s previous
performance, innovative ideas are absolutely essential if the company is
eager to increase or just maintain its market share. As business isn’t a
science, it’s impossible to determine exactly how long a particular strategy
should be employed before it’s changed. Premature shifts in marketing
strategy often have negative results. At the same time, in order to
minimize losses, it’s vital to recognize when a strategy isn’t a success so
that it may be altered.

Situation
In case of Microcomtec, the problem is precisely that described above.
Microcomtec’s strategy initially was to produce microcomputers for
general industrial use. When it wasn’t successful, Microcomtec targeted
two specific areas: material-testing automation and chromatography
automation. But that strategy seems to be failing. Is it the case, as Mr.
Dixon believes, that simply more time is needed to penetrate these special
targets, both domestically and overseas? Or is an absolutely new direction
needed? Finally, is the sweeping reform proposed by Ms. Stanley the right
direction if Microcomtec make a decision to alter its strategy?
Cast
Mr. David Robinson, President, Microcomtec Corporation
Mr. Henry Dixon, Vice-President, Microcomtec Corporation
Ms. Pauline Stanley, Computer Industry Consultant

The three are discussing Ms. Stanley’s report in Mr. Robinson’s office at
Microcomtec.
(Make use of the information given in Case Study, Some Points to Keep in
Mind, Situation).
P. Stanley realizes that her recommendations may seem very bold, but
given the present financial situation at Microcomtec she thinks bold
measures are needed. She tells Mr. Dixon she understands their
position, but she doesn’t feel that they’ve received enough inquiries
to warrant optimism. She considers that an order isn’t an order until
– 201 –
 they get a P.O. (purchase order) number. As for the European sales
office Ms. Stanley can’t see that it’s worth keeping. She reminds that
it doesn’t even pay for itself. Ms. Stanley finalizes the matter: she
was hired by them to do a study and make some recommendations.
She did that. It’s their choice whether to accept the recommendations
or not. She happens to think her recommendations are sound, but it’s
up to them to decide. She says that the reasons she thinks they are
sound are detailed in the report. She mentions some facts in her
speech. First, in three months of active effort the company have only
six orders. Second, the competition, particularly in chromatography,
is keen. Third, the European sales office is costing more than it’s
producing. Fourth, their microcomputer is too expensive, given the
fact that an IBM PC costs one-fourth as much as the Microcomtec
and is an industry standard. Granted, it may not do as much, but it is
basically all most researches need, given the right software. She
supposes if they convert their software so that it will run on the IBM
PC, they’ll be in a position to do just that. She also tries to assure Mr.
Robinson and Mr. Dixon that if they are more horizontal than vertical
in their approach to the market, they’ll have a larger target. Fifth, she
is sure that their advertising and sales promotion measures are not
getting to the right people. She recommends them to buy some lists
and then do a direct mail shot. She advises to go to every trade show
they can and demonstrate their product. She explains that the
audience they are trying to reach doesn’t take journal advertising
seriously. The audience wants more information than it can get in an
ad. She is sure that direct mail can give that to the interested party. In
Ms. Stanley’s opinion a demo can do even more.
Make use of the helpful phrases:
 Let me just say at the beginning …
 In the circumstances …
 I want to press the point …
 As far as I can gather …
 What with one thing and another …
 Gentlemen, let me make a couple of things clear …
 But let me just reiterate a few facts here …
 In the first place …
 If you ask me …
 I suppose …
 I take it for granted that …
– 202 –
 What do you think of … ?
 I’ll tell you what.
 Make the best of it.
 The long and the short of it is …

H. Dixon agrees and wants to know whether these are the right measures.
He says that his feeling is simply that they haven’t been aggressive
enough in their marketing. Also, he considers that the new targeted
fields – materials-testing automation and chromatography
automation – are not quick sells. It takes some time to build up
orders. He adds they launched their new campaign in the early fall.
It’s just January now. He thinks that Ms. Stanley is premature in her
assessment that this is not the right market. He has to admit that
orders aren’t coming in in the necessary quantity, but they are getting
more and more inquiries, and with proper action they should be able
to turn them into orders. He isn’t that optimistic at all about it. But he
feels they have to give this market, this product, some chance. Their
sales manager in Rotterdam, Nick Govern, is right now working on
an order for ten Microcomtecs, plus software. That amounts to
$200,000. Henry tries to assure Ms. Stanley that Nick feels confident
he’ll get an order for ten Microcomtecs. At the same time he accepts
Ms. Stanley’s arguments concerning the European sales office. He
reminds that it hasn’t paid for itself in four months. But he still
doesn’t feel that means they should shut it down. He believes the
potential is there. Nick is a good sales rep, and things are beginning
to turn.
Make use of the helpful phrases:
 Right on both counts …
 The question is …
 I dare say …
 I am inclined to think …
 The way things are …
 Looks like that …
 I won’t deny …
 In a way yes …
 I don’t mind telling you … but …
 Primarily …
 As far as … is concerned …
 On the surface (of it) …
 What matters is …
– 203 –
D. Robinson thinks that Henry is right to some extent. But the orders just
aren’t coming in fast enough. David understands that they can’t play
a long-term waiting game. They don’t have the capital to last. D.
Robinson wants to know what Henry is basing his sales projections
on. Robinson supposes that they should consider the problem
concerning the European sales office. D. Robinson expresses his
disagreement with Ms. Stanley’s opinion that it isn’t worth keeping
the European Sales office. But he has to agree that it barely pays for
itself.
Make use of the helpful phrases:
 I mean to say …
 Actually …
 But the truth is …
 In the circumstances …
 As far as I can see …
 Could you possibly …, please?
 That brings up the whole matter of …
 I disagree with you (on that point) …
 I differ from you …
 There’s something in what you say, but …
 I must admit …
Making a Decision
In coming to a decision about this case, consider the following points:
 Stanley’s recommendations
 Dixon’s original marketing strategy
 The significance of the European office
 The poor financial position of Microcomtec
 Dixon’s revised strategy
 The risks involved in radically changing the nature of the company
What other factors should be discussed?
Your decision:

– 204 –
3.9 GRAMMAR BACK UP

The Infinitive, Past Participle and the “-ing” form

(Revision)
Exercise 3.9.1
Choose the correct form of the Verbals.
Figures (appearing/appeared) in balance sheet represent the historical
value of the stock of assets available to the firm (to generate/generating)
sales and profits. Because the value of assets is (base/based) on original
purchase price they tend to understate the real value of these assets if they
had to be (replacing/replaced). In high inflationary periods, the cost of
replacing (existing/existed) assets is relatively high. As a result, by
(understating/having understated) the value of these assets, the returns on
these assets become (overstating/overstated). Attempts have been made
(state/to state) assets on a replacement basis, but accountants have been
unable to resolve this problem to everyone’s satisfaction.
Generally (spoken/speaking), however, the balance sheet is a
statement of assets, liabilities, and stockholders’ equity. As of a certain
date, the left side on this statement shows a breakdown of current assets in
the form of cash and other assets that (constituting/constitute) the working
capital of the firm. Fixed assets are mainly long-term investments,
including plant and equipment.
The right side of the balance sheet shows current liabilities,
(consisting/consisted) of accounts payable, notes payable, and other short-
term liabilities. From this point on you find long-term debt, which has a
maturity date of over 1 year. This part of the balance sheet may also
include the capitalized value of financial leases. After you (deduct/
deducted) the liabilities from the assets, the (remaining/remained) value is
the net worth of the firm. The components of net worth include the par
value of common stock outstanding1, paid-in capital surplus2, and retained
earnings (being accumulated/accumulated) from previous profits generated
by the firm after the deduction of dividend payments. If the firm were
(liquidated/liquidating) and all creditors’ claims (paid off/paying off), the
net worth is what would be (left/leave) over for distribution to the
stockholders.
By (deducting/deduct) current liabilities from current assets, you can
find out something about the liquidity of the firm, and by matching profits
against the assets invested in the firm, you can gain some idea of how
effectively the firm has utilized assets to generate profits.
                                                            
1
Номинальная стоимость выпущенных простых акций.
2
Эмиссионный доход.
– 205 –
Exercise 3.9.2
Open the brackets, putting the verbs in the correct forms. Make use of
the table above.

1. You can find out this bank’s phone number by (look) in the directory.
2. Last year our company attempted (take over) its nearest competitor.
3. The growth in multinational corporations (to manufacture and trade)
on a worldwide basis has led to the growth in the overseas operations
of major banks over the last twenty years.
4. As is known, a bank’s size is a significant factor in (determine) how
banks are organized.
5. One of the most important functions of a central bank is to accept
responsibility for (advise) the government.
6. (Earn) profits cannot be the responsibility of business, because its
main exercise is to create organizations with a real commitment to the
community.
7. The Anti-Monopoly Minister was accused of (to be inefficient)
because he discourages original ideas and postpones decision-making.
8. (Increase) its range of services to private individuals, our bank
(install) and is continuing to develop its own electronic transaction
card system.
9. (Hope) to restore investor confidence, the US administration has
adopted a law (tighten) regulation of companies’ financial reporting.
10. Deposits, payments and credits are the basis of the services (to offer)
by banks.
11. The services make it possible for banks to generate profits and achieve
their (to operate) aims.
12. The necessary information is (to provide) by the profit and loss
account for the period in question.
13. A bank’s (to account) systems are (to design) to record and present the
many transactions that take place every day.
14. A bank should have (to retain) profits in the business for future
operations.

– 206 –
 Infinitive or the ing-form
Verbs followed Modal verbs The The bare Verbs and Verbs
directly followed to- infinitive infinitive after expressions followed
by the to-Infinitive by the after object+verb followed by the
to-Infinitive object+verb (Complex by the bare ing-form
(Complex object) object) infinitive
agree be bribe make can admit
aim have command let may anticipate
appear ought compel help* must appreciate
arrange used enable see* need* avoid
ask going entitle hear* have* consider
attempt feel watch shall defer
bother force observe will delay
care hear notice could deny
choose implore feel* should detest
claim induce would dislike
decide instruct had better dread
decline invite would rather enjoy
demand oblige can’t but escape
determine order excuse
fail persuade fancy
forget remind finish
guarantee request forgive
happen see imagine
hesitate show how involve
hope teach keep
learn tell mean
manage tempt mind
neglect train miss
offer urge pardon
plan warn postpone
prepare watch practise
pretend prevent
proceed propose
promise resent
prove resist
refuse risk
resolve suggest
seem understand
tend
threaten
trouble
try
undertake
– 207 –
 Infinitive or the ing-form
(continued)
The the ing- The to-infinitive The The Expressions and Phrasal verbs+ ing-
form after after certain to-infinitive to-infinitive prepositions form
the verb nouns or ing-form or ing-form followed
or The after the after the by the ing-form
to-infinitive verb verb
after (no change (meaning
object+verb of meaning) different)
allow ability begin remember be accused of approve of
permit ambition start stop be accustomed to be for/against
advise anxiety continue go on be used to care for
recommend attempt cease regret be worth give up
encourage decision can’t sorry for be good at insist on
bear
forbid demand intent try have interest in keep on
desire intention of leave off
determination it’s no good/use look forward to
eagerness possess/have an object to
advantage in/of
effort possibility of /for put off
failure responsible for see about
need save smb the take to
trouble of
offer succeed in
plan there’s no point in
promise
refusal
request
responsibility
(for)
scheme
willingness
wish
without
by
for
in
at
before

– 208 –
Exercise 3.9.3
Do it in Russian
1. Устав от борьбы за контроль над компанией, в которой конку-
ренты использовали доверенности на голосование на общем
собрании, они сдались.
2. Я не знал, что, владея акциями компании, я буду ее совла-
дельцем.
3. Мужчина с портфелем ручной работы вон там – это посредник,
представляющий компанию-конкурента.
4. Какие проблемы обычно ассоциируются с дефицитом платеж-
ного баланса?
5. Импортированное оборудование составило почти одну четвер-
тую часть всего машинного оборудования проданного в стране.
6. Судя по тому, что было только что упомянуто, производители
могут покрыть кое-какие свои производственные издержки с
помощью предоставленной субсидии.
7. Не зная полного адреса бенефициара, агент не смог послать
письмо.
8. Контракт содержит статью, предусматривающую, что все спо-
ры, время от времени возникающие по нему (по контракту),
должны передаваться в арбитраж.
9. Зная, что уровень продаж начал снижаться, мы предложили
бартерную сделку.
10. Бесполезно вкладывать средства в это предприятие. Я получил
внутреннюю закрытую информацию: им угрожает недру-
жественное поглощение.
11. Так как эти запчасти не продаются по текущей цене, они всегда
пользуются спросом.
12. Потребовав, чтобы платеж был осуществлен безотзывным ак-
кредитивом, они также настояли, чтобы партнеры подтвердили
его через Лондонский банк.
13. Пытаясь ограничить предложение и контролировать цену на
конкретный товар, картели регулярно собираются, чтобы ре-
шить, сколько товара продавать и сколько брать за свой про-
дукт.
14. Называя по буквам слово, когда я говорю по телефону с чело-
веком, говорящим по-английски, я всегда пользуюсь официаль-
ным алфавитным кодом министерства почт Великобритании.

– 209 –
 15. Проценты по депозиту выплачиваются по ставке, определяемой
банковской базовой ставкой.
16. Секретарь, печатавшая письмо, работала, не говоря никому ни
слова.
17. Секретарь, печатавшая письмо для своего шефа вчера, считает,
что оно очень важное для поставщиков.
18. Упомянутая цена была на 5% ниже, чем та, которую платили
по предыдущему контракту.
19. Введя налог, которым облагаются ввозимые в страну товары на
основе их стоимости или количества, страна уменьшила объем
импорта и таким образом скорректировала дефицит платеж-
ного баланса.
20. Покупатели согласились оплатить сумму счета-фактуры против
представленных документов, не отклонив заказ.
21. Получив чрезвычайно высокие прибыли, компания испытывала
трудности, т.к. ее подозревали в инсайдерской торговле.
22. “Ты бы лучше привел в порядок свой личный бюджет, чем
жить постоянно в долг”. – посоветовал Г. Грант Питеру.

Exercise 3.9.4
Think of the word which best fits each space. Study the table above.
Make use of it and add to it.
1. As a rule the five-year period runs from the date of … a savings
account, and care does need to be taken if you decide to switch
accounts.
(A) opening
(B) having opened
(C) being opened
(D) having been opened
2. It does not make sense to deny that there is a need … our shareholder
value in an increasingly competitive environment.
(A) to improve
(B) improving
(C) being improved
(D) to have improved
– 210 –
3. Banks today keep accounts … software that automatically converts
their entries into international notation.
(A) being used
(B) by using
(C) having used
(D) use
4. Barely a day goes by without movement in the oil market … as a
rationale for the performance of the US dollar.
(A) citing
(B) being cited
(C) having cited
(D) cited
5. The talks on … a $100 million credit line to two Russian shipping
companies are under way.
(A) having provided
(B) providing
(C) provided
(D) being provided
6. “What ... that someone from the firm ought ... an opinion of the
damage?”
(A) ... makes you assume ... to go up and give to us ...
(B) ... makes you think ... to go up and give us ...
(C) ... makes you thinking ... go up and give us ...
(D) ... make you think ... to go there and give us ...
7. The growing popularity of electronic brokerage systems for foreign
exchange tends … liquidity1.
(A) eroding
(B) to erode
(C) having eroded
(D) to have eroded

                                                            
1
Вымывать ликвидность.
– 211 –
8. Do ... somewhere a little more forward-looking! Or I ... die!
(A) ... let’s us go ... would rather
(B) ... lets go ... would sooner
(C) ... let’s go ... would rather to
(D) ... let’s go ... would rather
9. Another popular method is … the forward rate as a premium or
discount from the spot rate, … as the swap rate.
(A) еxpressing … knowing
(B) expressed … known
(C) to express … known
(D) to have expressed …know
10. ... , you are ... GBP 503.55 in settlement of our statement of account
dated 10th December.
(A) To cut a long story to short ... enclose your cheque for ...
(B) If cut a long story short ... enclosing your cheque for ...
(C) To cut a long story short ... to enclose your cheque for ...
(D) Cut long story short ... to enclose yours cheque for ...
11. Protective tariffs make ... and encourage people ... country.
(A) ... import products rather more expensive ... to buy goods
producing in their own ...
(B) ... imported products lots more expensive ... to buy goods
produced in their own ...
(C) ... imported products somewhat more expensive ... buying
goods produced in theirs ...
(D) ... imported products expensive than ... buying goods
produced in their own ...
12. ... turnover.
(A) Without having a capacity to produce the order, they refused
taking it in excess of the budgeted
(B) Without having a required production capacity for the order,
they were looking forward to take it in addition to the
budgeted

– 212 –
 (C) Not having a producing capacity, they refused to take the order
in addition to the budget
(D) Not having a capacity to produce the order, they refused to
take it in addition to the budgeted
13. John Martin ... for his staff.
(A) had sometimes had to take troublesome decisions but he is
assumed to be caring and concerned
(B) sometimes had to make unpopular decisions but he is known to
be caring and concerning
(C) has sometimes had to make tough decisions but he is known to
be caring and concerned
(D) has sometimes to take strong decisions but he is know to be
caring and concerning

Exercise 3.9.5
Choose the correct way of completing each sentence.
1. As a rule, senior vice-presidents are responsible (to assist/for assisting)
heads of various departments.
2. Large banks generally succeed (to raise/in raising) financial capital at a
relatively low cost.
3. Small banks are good (to place/at placing) the banker close to the
customer.
4. This bank possesses the important advantage (to be able/in being able)
to attract smaller consumer-oriented deposits.
5. Some banks have a possibility (to offer/of offering) all of their services
from one office.
6. Before (to register/registering) a commercial bank Russia’s Central
Bank checks up the origins of its start-up capital.
7. Our bank has an intention (to lend/of lending) more to the real sector,
although it has to hedge against high risks involved in this sort of
activity.
8. The adoption of the law (to insure/on insuring) private individuals’
deposits is one of the key elements of banking reform in the Russian
Federation.
9. Banks are accustomed (to being criticized/to be criticized) for a high
level of interest rates and unfavourable conditions of lending.

– 213 –
Exercise 3.9.6
Familiarize yourself with the information below. Tick () the correct
words or word combinations.

We are back in the Accounts Department today. Christopher Thorn, the

Management Trainee, is studying | is study | studying the work in the
Accounts Department. Having look through the accounts| Having looked
through the accounts | Looking through the accounts , Mr. Buckhurst, the
Chief Accountant, decided to chase up some bad debt, that is, money
which has been owing to the firm for a long time.
Collected bad debts | Being collected bad debts | Collecting bad debts is
often a difficult affair. Retail business is usually done on a cash basis, and
wholesale business is done on credit. Harper & Grant mainly do business
on wholesale terms: they have the credit given | they have to give credit |
they have given credit , that is, shops or stores can have the goods they
want |can have the goods want | can have wanted the goods and defer
payment. But credit is usually only given for thirty days.For each
individual sale an invoice is sent to the customer, that is a list of the goods
delivered | a list of the goods been delivered | a list of the delivering goods
and the amount owing | the amount owed | the owe amount, on that
particular transaction. At the end of the month each customer is sent an
account, which shows the total amount due.
Any company likes to receive long credit from its suppliers and would like
to give short credit to its customers. Offered a small discount | Offering a
small discount | Having been offered a small discount, the supplier offers
an inducement to customers to pay earlier than they need; i.e. the customer
pays slightly less if he pays within, say, ten days of the date of invoice.
Sometimes, of course, a debtor cannot pay; for example, it may happen
that a firm never gets its money because another firm whom they supplied
with goods has become insolvent. In some cases a firm does not pay
because the people who run it are dishonest.

– 214 –
Accounts not paid in time | Accounts not being paid in time
|Accounts been not paid in time are called overdue accounts. Very often
a sales representative has to call and collect the money or make enquiries.
Sometimes, in very difficult cases, a firm employs a professional debt
collector. No company wants to get a reputation for to be a bad payer |
been a bad payer| being a bad payer. It may then be difficult to get supplies
on credit. There are agencies which will give information about the
financial situation of almost any company, so that suppliers can judge
whether they are a good credit risk. Many buyers will suggest a supplier to
write | a supplier writing | that a supplier writes to their bank for a
reference. Luckily, Harper & Grant always mark their goods with a serial
number. Some firms do this, others do not. In this case, it turns out being |
it turn out to be | it turns out to be very useful indeed.

Writing Essays
Write a 200-word opinion essay according to the following plan.
 make an introduction (state the problem)
 express your personal opinion and give 2–3 reasons for your opinion
 express an opposing opinion and give 1–2 reasons for this opposing
opinion
 explain why you don’t agree with the opposing opinion
 make a conclusion restating your position
Topics for opinion essays
 Income-tax advantages encourage the corporate form of organization
 Small-business type of corporation need tax advantages
 Auditors should possess special personality characteristics
 Accountants do not need any special features of character
 Only Big Four firms provide excellent setting to learn the business of
accounting

– 215 –
 There is practically no difference between a public accountant and a
private accountant
 Accounting information is only for accountants
 The balance sheet is a status report rather than a flow report

Topics for the Power Point presentations

1. Uses of Accounting Information
2. Financial statements
3. Generally Accepted Accounting Principles (GAAP)
4. International Financial Reporting Standards (IFRS)
5. Accounting Standards, Assumptions and Principles
6. Profit and Loss Accounts
7. Consolidated Income Statement
8. Consolidated Balance Sheet
9. Balance Sheet Formats
10. Jobs in Accounting
11. Tax Accounting
12. Accounts Chamber of the Russian Federation
13. Microcomtec’s Financial Position
14. Microcomtec’s Marketing Policy
15. Risks Involved in Running a Company

– 216 –
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Памухина Л.Г., Любимцева С.Н., Архангельская Т.Р., Жолтая Л.Р.,
Князева М.И., Галкина Л.И. Английский язык для деловых
людей. М.: ГИС, 2006.

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Пивовар А.Г. Большой финансово-экономический словарь / Под ред.
В.И. Осипова. М.: Экзамен, 2003.
Практический курс английского языка: Учеб. для педвузов / В.Д.
Аракин, И.А. Новикова, Г.В. Аксенова-Пашковская и др. – 3-е
изд. перераб. и доп. М.: Владос, 2006.
Федоров Б.Г. Англо-русский банковский энциклопедический сло-
варь. СПб.: Лимбус Пресс, 2004.
Чмель А.В. Англо-русский словарь бухгалтерских терминов / Под ред.
проф. Я.В. Соколова. М.: Финансы и статистика, 2001.

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 ЗАКЛЮЧЕНИЕ

Дорогие друзья!
Окончив изучение второй части “Environment” серии учебников
«Английский язык: экономика и финансы», вы получили возмож-
ность обсудить на английском языке следующие сферы, ситуации и
темы общения будущих экономистов:
 Рынок финансовых услуг;
 Организационно-правовые вопросы предпринимательской
деятельности;
 Страховой рынок и защита бизнеса и личных финансов.
 Бухучет и аудит в финансовой системе государства и системе
управления предприятием;
Вы ознакомились с непростыми явлениями, относящимися к мор-
фологии и синтаксису английского языка. Обширный грамма-
тический материал в пособии совмещен с упражнениями, направ-
ленными на проверку и закрепление изученных профессионально
ориентированных материалов.
Особое внимание в пособии уделено ролевым играм, призванным
развивать самостоятельность студентов и их умение применять на
практике полученные знания. Тематика ролевых игр предполагает
постепенный переход от рассмотрения экономических проблем на
уровне потребителя к имитации профессионально ориентированных
ситуаций, что поможет выпускникам не испытывать затруднений при
иноязычном профессиональном общении.
Желаем успехов!
Авторы.

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 CONTENTS

Введение ........................................................................................................... 5

UNIT 1 ENVIRONMENT OF GLOBAL FINANCE ................................ 6

Dialogue 1 Import and Export .................................................................. 27
Dialogue 2 Trade Restrictions .................................................................. 32
Case Study & Role-play 1 Considering a Countertrade Proposal ............. 43
Case study & Role-play 2 Limit on Car Imports ...................................... 51
Practice with infinitives .............................................................................. 60
Topics for the Power Point presentations ......................................................... 76
UNIT 2 THE FIRM AND ITS ENVIRONMENT .................................... 77
Dialogue 1 Types of Securities ............................................................... 101
Dialogue 2 Mergers, Takeovers, Acquisitions ........................................ 106
Case Study & Role-play 1 The Merits & Demerits of Reorganization ... 116
Case study & Role-play 2 A Management / Employee Conflict ............ 121
Practice with Participles and the –ing form .............................................. 129
Topics for the Power Point presentations ....................................................... 145
UNIT 3 ENVIRONMENT OF ACCOUNTING ..................................... 146
Dialogue 1 Jobs in Accounting ............................................................... 182
Dialogue 2 Tax Accounting .................................................................... 186
Case Study & Role-play A Difficult Time for Microcomtec Corporation 196
Practice with Verbals: Revision ................................................................ 205
Topics for the Power Point presentations ....................................................... 216

Библиография ............................................................................................... 217

Заключение .................................................................................................. 220

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 Учебное издание
Галина Алексеевна Дубинина,
Ирина Федоровна Драчинская,
Наталья Геннадиевна Кондрахина,
Оксана Николаевна Петрова
АНГЛИЙСКИЙ ЯЗЫК
ЭКОНОМИКА И ФИНАНСЫ
Ч а с т ь 3
ENVIRONMENT
УЧЕБНИК
4‐е издание, исправленное и дополненное
Верстка Т.В. Авдеевой
Оформление обложки Т.А. Антоновой
Публикуется в авторской редакции
Подписано в печать 15.08.2016
Усл.п.л. 14,00. Уч.изд.л. 9,50
Формат 90х60/16. Тираж 500 экз.
Заказ №757

ФИНАНСОВЫЙ УНИВЕРСИТЕТ
125993 (ГСП-3), Москва, Ленинградский проспект, 49
Отпечатано в ООП (Ленинградский пр., 51)
Издательства Финансового университета

 
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ДЛЯ ЗАМЕТОК

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ДЛЯ ЗАМЕТОК

 
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