Unit 7:Bank Accounting Financial English

Unit 7:Revision of Unit 6 Background information of Unit 7 TextExercisesAssignment

Review of Unit 6Dictation Exercises Check-upBlanks fillingRevision of Text A

Spot DictationDictation!You are going to hear 5 sentences. Each willbe read three times. Write down the sentences according to what you hear.1.2.3.4.5.Check-up

Key to Dictation:Dictation1.Generally speaking, there are three main types of bank deposits.2.Banks play a vital role in the capital formation of a country through saving and investment functions. 3.Buying CD is a safe way to invest money, and is very useful for certain people.4. Any kind of emergency may occur when you need huge amount of money. 5.Student loan as it itself shows is that it is provided basically to students for higher education .

II. Fill in the blanks with proper words or phrases given below Check-upstability, health, liabilities,ability, loan, adverse

1. Risk management shortcomings need to be addressed not only to improve the ______ and viability of individual institutions, but also to maintain ______ for the financial system as a whole. 2. Liquidity risk arises from the inability of a bank to accommodate decreases in _____ or to fund increases in assets. Check-up

Risk management shortcomings need to be addressed not only to improve the health and viability of individual institutions, but also to maintain stability for the financial system as a whole. 2. Liquidity risk arises from the inability of a bank to accommodate decreases in liabilities or to fund increases in assets. Check-up

Check-up3. To evaluate the credit risk, banks must first obtain certain basic information, such as the integrity of the borrower, his ______ to repay and the his financial position, how much money is being sought, the _____ of the loan, how long it is needed, and how it will be repaid, etc. 4. Interest rate risk refers to the exposure of a bank's financial condition to _____ movements in interest rates.

Check-up3. To evaluate the credit risk, banks must first obtain certain basic information, such as the integrity of the borrower, his ability to repay and the his financial position, how much money is being sought, the purpose of the loan, how long it is needed, and how it will be repaid, etc. 4. Interest rate risk refers to the exposure of a bank's financial condition to adverse movements in interest rates.

Unit 9:Revision of Unit 6 Background information of Unit 7 TextExercisesAssignment

Unit 9:Part I: 7.1 Brief Introduction Part II: 7.2 How Does Bank accounting work?

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Text : Background InformationClearing house

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Listening

Language PointsText

ListeningTextBank Accounting Listen carefully to the first part of the text and then try to translate it.

Bank Accounting 7.1 Brief Introduction Bank accounting consists in making written, permanent records of every transaction. Every penny must be accounted for. The statement of the bank shows the general, or control, accounts of the bank, and the various books of the bank show the detail of these items. It would not be impossible, but it would be entirely impractical, to enter every figure directly on the statement of condition. We might imagine an enormous sheet on which the capital is entered as to the ownership of each share of stock. Instead of total deposits, the balance of each depositor would appear opposite his name. Text :

On the other side, instead of loans and discounts, there would be an itemized list of the loans with the names of the borrowers. With such a sheet spread out over a floor space of great area, we might imagine the clerks crawling up and down the columns like flies making debits and credits. This is, of course, absurd, but it is precisely what happens, except that the entries are made on books, loose leaves or cards, and the final results are posted on the statement of condition which is thus altered day by day. Text :

As in other matters we have mentioned, banks are also alike with respect to bank accounting, the same principles govern whether the bank is large or small, national bank or trust company. All the books are a part of the general books, and the extent to which they are divided depends on the size of the bank. Division is made to fit the capacity of the clerk. When any part of the work becomes too burdensome for one man, he may be given an assistant or the books and records will be further divided, so that two men can do the same thing without conflicting. Text

In very large banks a clerk may spend all his time listing checks upon a sheet, or adding up certain columns of figures or doing any one of a thousand things that must be done in the process of keeping accounts. Unless he is studious and observant, he loses sight of the fact that his work is a part of the whole, he becomes mechanical, falls into a rut and banking, instead of being an interesting employment full of possibilities, is to him mere drudgery. He is standing so close to the machinery that he allows it to master him instead of broadening his vision by study and thus mastering his task. Text

Text : Language Points permanent adj., , ;, 1. permanent address 2. five permanent members. 5

account for v. ;1. How do you account for it? 2. Cotton account for 70% of our export. 70 3. You should account for the accident. Text : Language Points

statement n. , , 1. issue a statement 2. balance of payments statement

Text : Language Points

Text : Language Points impractical adj. , ;, 1. They felt the idea quite impractical. 2. A theory that proved impractical in practice.

Text : Language Points stock n. 1. a stock for making paper 2. the gold stock 3. a stock of knowledge 4. stock market

Text : Language Points deposit n. vt. , vi. 1. demand deposit 2. When the River Nile is in flood, it deposits a layer of mud on the fields. , 3. You may deposit your returned books with the librarian.

Text : Language Points itemize vt. , 1. Itemize the sale figures 2. an itemized account

Text : Language Points spread out ; ; ; 1. Dick spread out a map. 2. Vineyards spread out on both banks.

Text : Language Points mention n. , , vt. , 1. as mentioned above 2. Did you mention this to my sister? ?

Text : Language Points division n.(), ; , 1. division of labor 2. an administrative division

Text : Language Points capacity n., ; , 1. This can has a capacity of four quarters. 2. We admire his capacity.

Text : Language Points burdensome adj. , , 1. The work was burdensome. 2. an unpleasant or burdensome task.

Text : Language Points studious adj. , ; 1. He is always studious of his business. 2. The study was furnished with studious simplicity.

Text : Language Pointsobservant adj....(of);;1. be observant of the traffic rules 2. Journalists are trained to be observant.

Text : Language Points drudgery n. , 1. household drudgery 2. She was living a hole-and-corner existence of daily drudgery.

ListeningText7.2 How Does Bank accounting work? Listen carefully to the second part of the text and then try to translate it.

7.2 How Does Bank accounting work? ACCURACY FIRST PRINCIPLE The first principle in bank accounting, as in all other bookkeeping, is that for every debit there must be a credit, and vice-versa. In accordance with this fundamental theory the books must always be in balance. As we have seen with respect to the statement, every dollar of liabilities is accounted for by another dollar of resources. This is true of every bank. If the institution is large enough to be divided into departments, such departments are charged with all funds passing through their hands, and they must show on their records what has become of every penny. Text:

Similarly each clerk, bookkeeper or teller accounts at the end of the day for each item of cash he has handled. Every bank clerk has had the experience of remaining at his desk until a late hour at night checking up his day's work searching for a difference of a few cents. Often he becomes embittered at what seems to him a tyranny when the small sum of money involved is considered. The reason he must settle, however, is not on account of the possible loss of ten cents, but because the most important principle in bank accounting is involved. "Accuracy first" is a motto that should be framed, figuratively at least, upon the wall of every banking room. Text:

TYPES OF BOOKS IN BANK ACCOUNTING The books used by a bank are of various kinds and their purpose is indicated by name. A ledger is a book used to keep a record of balances. To "post" means to enter in the proper columns either the debits or credits on the ledger, and the difference between them represents the balance either due by or to the bank. Most banks are doing away with bound books, especially ledgers, and substituting cards or loose leaves. Text:

This plan enables several men to work on the same records, which would be impossible if they were bound in a single book. Alphabetical division is also easier of adjustment and "inactive" accounts can be readily separated from "active" accounts. Totals of balances can be listed upon adding machines for proof more easily from loose sheets than from bound books. But whether bound or not, records of balances are kept upon ledgers. Text:

A journal is a book in which daily transactions are listed in regular order as to accounts, and the total debit or credit is then posted on the ledgers. Journals, too, may be loose sheets so that they can be inserted in the carriage of an adding machine; indeed, machines have been invented upon which both debits and credits may be written and the machine will automatically subtract or add and print the new balance. The journal, then, is merely a subdivision of the ledger. Text:

A depositor of the bank wishes his account to be charged and the money paid to a named payee. The piece of paper upon which he writes this order is a "check." If he deposits money, he writes the memorandum of the amount upon a ruled slip of paper and this is the "deposit ticket." Bookkeepers enter debit and credit records upon their journals directly from these items. Money, however, may change hands or from one account to another, in other ways; by letter, telegram or other debit and credit advice. Text:

In such cases a "charge ticket" or "credit slip," as the case may be, is signed or initialed by an officer of the bank, and entry with full explanation is made upon a book from which record the bookkeeper makes his entries. This book is known as a "scratcher," or a "tickler". The terms mean practically the same thing. A book upon which a complete description of a negotiable instrument or transaction is made for a permanent record or for reference, is called a register. For example, bond register, collection register, etc. Text:

All other books, cards, sheets of whatever nature are a part or subdivisions of these books. Often they become known among the clerks by some other name descriptive of their general appearance. For instance, the general ledger scratcher in one bank is known as the "red book," while the collection department scratcher is the "black book." These names have stuck through generations of clerks, and a young man going into another bank has been known to ask for the "black book," and being untrained in accounting, he had difficulty in making himself understood. Text:

Similarly, in New York City banks the pigeonholed desk where checks are assorted for the clearing house is generally known as the "clearing house rack." A New York bank clerk visiting a Philadelphia institution and asking to see the "rack" would probably be shown a hat room. The records made by one clerk upon one set of books, in a well-appointed accounting system, go to check the records of another clerk upon a different set of books. Text:

For instance, the paying teller and the receiving teller will each keep a record of checks cashed or deposited payable within the bank. The debit postings of the individual bookkeeper would agree with the teller's figures. Skillful accounting lies in making the fullest possible use of original entries, at the same time having a check on all figures to guard against either error or fraud. Many young bank men have materially increased their salaries and rate of promotion by devising improved accounting methods. Text:

THE INFLUENCE OF DEBIT AND CREDIT ON THE BANKS STATEMENT OF CONDITION As has been said, every transaction ultimately affects the bank's statement of condition by debit or credit. A deposit of $1,000.00 is made, consisting of $200.00 cash, and checks as follows: $200.00 on the bank itself and $600.00 payable in another city. At the end of the day (assuming this to be the only deposit), on the liabilities side there is an increase of $800.00, all of which appears in the item "deposits" being the total $1,000.00, less the check for $200.00 which is charged to the account of the drawer. Text:

On the resource side, then, we must have a corresponding increase of $800.00, and this is made up by an increase in the cash of $200.00 and an increase of $600.00 in the item "due from banks." Or a transaction may appear on one side of the statement only. The bank has sold $5,000.00 of the bonds it owns. The bond item of resources would show a reduction of this amount, and either "cash" or "due from banks" would be increased, depending whether payment was made in cash or by check. If payment for the bonds is made with a check on the bank itself, both sides of the statement are affected, a corresponding reduction in deposits taking place. Text:

Anyway, bank accounting is a complicated job. Banks activity consists not only of what people can see in the lobby, but lots of sophisticated financial operations are conducted in the offices away from the lobby where people can rarely see. Although by nature, accounting department in a bank is similar to that in a company, their working contents are different. Text:

As for a bank accountant, his major responsibilities include preparing the balance sheet (also called statements of condition) that determines the stockholders equity and which appears in the banks annual report, assigning entries to a proper category, that is, deciding whether a particular entry comes under the heading of loans, commercial paper, debentures, interest income and expenses and so on, as well as figuring out depreciation and amortization of premises and equipments. Text:

principle n., ; , , Text : Language Points1. the principles of political economy 2. the first principle of all things

vice-versa Text : Language Points1. China needs the WTO and vice versa. 2. Do you want the soup before the salad or vice versa?

in balance Text : Language Points1.Victor hangs in the balance. 2.To set in contrast, opposition, or balance.

institution n. ; ; ; Text : Language Points1. the institution of regulations 2. the institution of slavery 3. The institution suffers from over-organization.

embitter vt.; , ()Text : Language Points1. The loss of all his money embitter the old man. 2. Repeated failures embittered him.

tyranny n.; ;, Text : Language Points1. cultural tyranny 2. Those states lie under a tyranny.

on account of Text : Language Points1. He driven very slowly, on account of fog ,2. The game was called off on account of rain.

motto n. , , Text : Language Points1. Beijing's bid motto is "New Beijing, Great Olympics". " 2. Americans tend to live by the motto, "Time is money.

indicate vt.; ; ; ; Text : Language Points1. A signpost indicated the right road for us to follow. 2. Fever indicates sickness.

represent vt. , , , , , ,Text : Language Points1. Never represent yourself as perfect. 2. They represent all social strata.

separate from ......, ...... Text : Language Points1.separate government functions from enterprise management 2.To separate grain from chaff.

regular adj., ; ; , Text : Language Points1. regular buildings 2. a regular air service 3. He kept regular hours.

automatically adv. Text : Language Points1. The new monitor apparatus is automatically controlled. 2. Subway doors open and close automatically.

subtract vt. Text : Language Points1. 6 subtracted from 9 gives 3. 9 632. That subtracts nothing from his merit.

charge n. , vt. , vi. Text : Language Points1. charge sb. with murder 2. He was charged with an important mission. 3. charge of irrigation water

memorandum n. , Text : Language Points1. a memorandum about the meeting 2. His suggestion was contained in a memorandum published here today.

description n. , , Text : Language Points1. He gave a description of what he had seen. 2. He is not very good at description.

general n., , ; adj. , , Text : Language Points 1. the general opinion 2. a general meeting 3. in (the) general , , , () ,

clearing house Text : Language PointsThe total of claims presented daily at a clearing-house.

materially adv. , , Text : Language Points1. Materially, the family is quite successful. ()2. He was well-off materially.

promotion n. , , ;, , Text : Language Points1. John got a promotion 2. blatant or sensational promotion.

ultimately adv. Text : Language Points1. We hope ultimately to be able to buy a house of our own. 2. Truth will ultimately prevail.

assume vt. , , Text : Language Points1. We assume his guilt. 2. The youth should assume responsibilities.

corresponding adj. Text : Language Points1. All rights carry with them corresponding responsibilities. 2. corresponding in character or kind.

reduction n. , , Text : Language Points1. a 10 reduction 2. the reduction of armament 3. noise reduction by sound absorption

conduct n.vt. Text : Language Points1. a bad conduct 2. under the conduct of ...3. Some metals conduct heat.

responsibility n. , , Text : Language Points1. theory of social responsibility 2. take [assume] the responsibility of [for] ...

annual adj. , , Text : Language Points1. an annual report 2. An annual trip to Paris.

debenture n. , Text : Language Points1. debenture stock []2. Debenture holder has priority over ordinary shareholder.

depreciation n.Text : Language Points1. a depreciation of currency 2. They wrote off 500 for depreciation of machinery. 500

amortization n., ()Text : Language PointsAmortization of a debt.

I. Study questions.1. What is bank accounting? 2. If every detail of accounts is recorded into the statement of condition, what will happen to bank clerks? 3. Suppose you are a bank clerk, when a day is over, you find there is one dollar more you dont know where it comes, what will you have to do? Why? Excises

1. Bank accounting consists in making written, permanent records of every transaction.Excises

2. There would be an itemized list of the loans with the names of the borrowers. With such a sheet spread out over a floor space of great area, we might imagine the clerks crawling up and down the columns like flies making debits and credits. This is, of course, absurd, but it is precisely what happens, except that the entries are made on books, loose leaves or cards, and the final results are posted on the statement of condition which is thus altered day by day.Excises

3. I have to make sure of each item of cash I have handled. If there is anything wrong, I have to stay late to find the mistake and correct it. Excises

. Define the following terms. 1. Bank accounting 2. Ledger 3. Journal 4. Check 5. Deposit ticket Excises

1. Bank accounting -- Bank accounting consists in making written, permanent records of every transaction.2. Ledger --A ledger is a book used to keep a record of balances.3. Journal -- journal is merely a subdivision of the ledger. It is a book in which daily transactions are listed in regular order as to accounts, and the total debit or credit is then posted on the ledgers.Excises

4. Check ---- A depositor of the bank wishes his account to be charged and the money paid to a named payee. The piece of paper upon which he writes this order is a "check."5. Deposit ticket ---- If a person deposits money, he writes the memorandum of the amount upon a ruled slip of paper and this is the "deposit ticket." Excises

. Fill in the blanksBookkeepers enter debit and 1 records upon their journals directly from these items. Money, however, may change hands or from 2 account to another, in other ways; by letter, telegram or other debit and credit advice. In such cases a "charge ticket" or "credit slip," as the case may be, is 3 or initialed by an officer of the bank, and entry with 4 is made upon a book from which 5 the bookkeeper makes his entries. Excises

Bookkeepers enter debit and credit records upon their journals directly from these items. Money, however, may change hands or from one account to another, in other ways; by letter, telegram or other debit and credit advice. In such cases a "charge ticket" or "credit slip," as the case may be, is signed or initialed by an officer of the bank, and entry with full explanation is made upon a book from which record the bookkeeper makes his entries. Excises

This book is known as a " 6 ," or a "tickler". The terms mean practically the same thing. A book upon which a complete 7 of a negotiable instrument or transaction is made for a 8 or for reference, is called a register. For example, bond register, collection register, etc. All other books, cards, sheets of whatever nature are a part or 9 of these books. Often they become known among the clerks by some other name descriptive of their general 10 . Excises

This book is known as a "scratcher," or a "tickler". The terms mean practically the same thing. A book upon which a complete description of a negotiable instrument or transaction is made for a permanent record or for reference, is called a register. For example, bond register, collection register, etc. All other books, cards, sheets of whatever nature are a part or subdivisions of these books. Often they become known among the clerks by some other name descriptive of their general appearance. Excises

Excises IV. Translation 1. 2. (computerization)3. 4. 5. bookkeeping systemsummarizerCheck-up

Excises 1. Sources of bank funds and uses to which they are put should be listed in the form. 2. Since the computerization of accounting, the accounting has changed a lot.3. One of the most important jobs for bank accountants is to prepare the balance sheet that determines the stockholders equity. 4. Fixed assets comprise items that a company generally expects to keep for more than a year. 5. A basic bookkeeping system comprises a ledger which contains accounts, and prime entry records which act as collector and summarizers of financial data.

Excises 6. 7. When final accounts are prepared, the trading and profit and loss accounts are indeed debit and credit accounts in their own right, conforming to normal double entry principles. Check-up

Excises6. Non-current liabilities refer to debts that a company owes to others but need not to pay back for at least one year.7.

Excises8.The statement of owners equity presents a summary of the changes that occurred in the owners equity of the entity during a specific period, such as a quarter or a year. Increases in owners equity arise from investment by the owner and from net income earned during the period. Decreases result from withdrawals by the owner and from a net loss for the period. Net income or net loss comes directly from the income statement. Investments and withdrawals by the owner are capital transactions between the business and its owner, so they do not affect the income statement. Check-up

Excises8.

Excises V. Please compile an accounting entry according to the information below: A Company spent 50,000 yuan in purchasing raw materials, of which 30,000 yuan has been paid by its bank deposits, while 20,000 are unpaid. Check-up

ExcisesDebit () : raw material 50,000 yuanCredit(): deposits 30,000 yuan Account payable 20,000 yuan

Excises VI. Situational exercises Suppose you are the head of a bank accounting department, explain to some interns in your bank the function of the accounting department and the major duties they should perform as potential accountants. Check-up

ExcisesClues for answer: Bank accounting is a complicated job. Banks activity consists not only of what people can see in the lobby, but lots of sophisticated financial operations are conducted in the offices away from the lobby where people can rarely see. Although by nature, accounting department in a bank is similar to that in a company, their working contents are different.

Excises As for a bank accountant, his major responsibilities include preparing the balance sheet (also called statements of condition) that determines the stockholders equity and which appears in the banks annual report, assigning entries to a proper category, that is, deciding whether a particular entry comes under the heading of loans, commercial paper, debentures, interest income and expenses and so on, as well as figuring out depreciation and amortization of premises and equipments.

Assignments1.Review the Text .Keep in mind the special terms learned in this Unit.Do exercises in the book.