ENGLISH FOR GLOBAL ECONOMIC STUDIES (MGT & Act Students) PDF

ENGLISH FOR GLOBAL ECONOMIC STUDIES
Designed By: Henry Falentino, S.Pd., M.S
ATMA JAYA CATHOLIC UNIVERSITY

JAKARTA
2020
0
Unit 1
What Is Business?
Pre-reading Activity
Discuss the following questions.
1. When you see the word business, what do you think about? Quickly write
down words or ideas as they come into your mind.
____________________________________________________________
____________________________________________________________
____________________________________________________________
____________________________________________________________
Now discuss your notes with your classmates.
2. Write your own definition of business in the space provided below. Begin your
definition in this way:
Business is
Compare your definition with the one written by the person next to you. Add
to your definition if you find any new information.
Vocabulary
Below is a list of terms that you will find in the text. As you read “What is
Business?, “ see if you understand each term. Use this as a working list and add
other terms that you do not know.
NOUNS VERBS ADJECTIVES OTHERS

exchange examine technical for instance
production classify various on the other hand
distribution perform __________
sale remain __________
goods create __________
services ________
profit ________
conversion ________
surplus ________
1
Reading Passage
WHAT IS BUSINESS?
Business is a word that is commonly used in many different languages.
But exactly what does it mean? The concepts and activities of business have,
increased in modern times. Traditionally, business simply meant exchange or
trade for things people wanted or needed. Today it has more technical
5 definition. One definition of business is the production, distribution, and sale
of goods and services for a profit. To examine this definition, we will look at
its various parts.
First production is the creation of services or the changing of materials
into products. One example is the conversion of iron ore into metal car parts.
10 Next these products need to be moved from the factory to the marketplace.
This is known as distribution. A car might be moved from a factory in Detroit
to a car dealership in Miami.
Third is the sale of goods and services. Sale is the exchange of a product
or services for money. A car is sold to someone in exchange for money. Goods
15 are products that people need or want: for example, cars can be classified as
goods. Services, on the other hand, are activities that a person or group
performs for another person or organization. For instance, an auto mechanic
performs a service when he repairs a car. A doctor also performs a service by
taking care of people when they are sick.
Business, then, is a combination of all these activities: production,
distribution, and sale. However, there is one other important factor. This
20 factor is the creation of profit or economic surplus. A major goal in the
functioning of an American business company is making a profit. Profit is the
money that remains after all the expenses are paid. Creating an economic
surplus or profit is, therefore, a primary goal of business activity.
Comprehension
A. Answer the following questions about the meaning of business. Questions with
asterisks (*) cannot be answered directly from the text.
1. What is one modern definition of business?

2. How does this modern meaning of business differ from the traditional one?
What factors have brought about these changes?
3. What does production involve?
4. What example of distribution is given in the reading? Can you think of another
example?
5. How do goods differ from services?
6. In addition to production, distribution, and sale, what other factor is important
in defining business?
7. What is a profit? *In general, what do companies do with their profits?
2
8. Compare your definition of business with the one given in the reading. *How
are they similar? *In what way does your definition differ from the one
presented in the text?
B. Determine which of the following statements are true and which are false.
Then put T or F in the blanks. Rewrite false statements to make them true.
1. ____ Business is not just one activity but a combination of different

operations, such as production, distribution and sale.
2. ____ From ancient to modern times the definition of business has remained
the same.
3. ____ Moving a truckload of oranges from the orchard to the supermarket is

an example of production.
4. ____ A salesclerk provides a service by answering customer’s questions.
Vocabulary Exercises
A. Write down any terms that you did not understand in the reading. Find each
term in the reading, look at its context, and try to figure out the meaning.
Discuss these terms with your classmates.
B. Look at the terms in the left-hand column and find the correct synonyms in the
right-hand column. Copy the corresponding letters in the blanks.
g
1. ____goods a. moving or transporting
e
2. ____conversion b. trade
3. ____for
f instance c. however
a
4. ____distribution d. look at
5. ____exchange e. change
6. ____ on the other hand f. for example
7. ____ examine g. products
C. Complete the sentences with the noun and verb forms provided.
1. sales/sells
subject - object (singular) - predicate
a. An annual report includes the sales figures of the company for the current
fiscal year.
b. An auto dealership sells cars, trucks, vans, and sometimes recreational
vehicles.
3
2. distribution/distribute
a. Some companies hold exclusive ____________ rights for specific products.

b. Factory representatives __________products to wholesalers and retailers.
3. production/produces
a. How efficiently a company _________its products will in large measure

determine its success.
b. The _____________of high-technology instruments is one of the most
rapidly growing industries in the 1990s.
4. classification/are classified
a. Items _____________in order to show the relationship between them.

b. ____________means the grouping of items to show the differences
between them.
5. conversion/convert
a. When travelling from country to country, people ___________one currency

to another.
b. The production process often involves the _____________of raw materials
into finished products.
Text Analysis
Look at the reading passage to answer these questions.
1. The reading contains terms such as its, it, and this factor. These terms refer to
nouns or noun phrases that occurred earlier in the text. For example, its in
line 7 refers to one definition of business in lines 5-6. What does each of the
following refer to?
LINES WORDS REFERENTS

4 it __________
20 this factor __________
2. Transition words or phrases are used to clarify the relationships between

sentences. They are usually placed at the beginning of new ideas.
Transitions can be divided into groups according to their functions. Match the
following.

4
___ next (line 10) a. summarizing
___ on the other hand b. sequencing information
___ therefore c. contrasting
3. Line 7 refers to its various parts. List the parts of the business definition that
are explained in the reading.
a. ____________________________________________________________
b. ____________________________________________________________
c. ____________________________________________________________
d. ____________________________________________________________
4. What key transition words are used to introduce each new part of the
definition?
TRANSITION WORDS PARTS OF DEFINITION

a. _______________________ __________________________
b. _______________________ __________________________
c. _______________________ __________________________
d. _______________________ __________________________
5. A definition may take this form:
Production is the changing of materials into

products or the creation of
services.
term being defined verb to be definition
A number of terms are defined this way in the reading. Find and copy these
definitions in the spaces below.
a. Business is_______________________________________________________
b. _______________________________________________________________
c. _______________________________________________________________
d. ________________________________________________________________
e. ________________________________________________________________
Classification
Classification means the grouping of items to show the relationship between

them. Items that are classified together have something in common: that is,
something must apply to all the items in that group or class. Look at the items
below. They may be classified as either goods or services. Review the definitions
5
and examples given in the reading (lines 13-18). Classify the following items as
either goods or services.
 1. Car 8. Video cassette recorder 15. Office equipment repair

 2. Medical diagnosis 9. Management consulting 16. Newspaper delivery
3. Travel agency 10. Accounting ledger 17. Computer programming
4. Briefcase 11. Calculator 18. Time clock
5. Autorepair 12. Job placement 19. Law book
6. Financial Planning 13. suit 20. Income tax preparation
7. Computer 14. forklift
GOODS SERVICES
Car Medical diagnosis
Application
A. Match these parts of the business definition to the following real-life

situations.
 Production of goods
 Distribution of goods
 Sale of goods
 Sale of services
Examples:
Iron ore is made into metal car parts. Production of goods

A car is moved from a factory to a car dealership distribution of goods
A salesperson sells a car. sale of goods
An auto mechanic repairs a car sale of services
6
1 A shipment of grain is transferred from a boat
to a truck. _____________________
2 A chemical plant turns raw materials into
fertilizer. _____________________
3 A salesperson from a concrete manufacturer
convinces the owner of a building materials
company to buy a shipment of drainage pipe
from his company. _____________________
4 A warehouse ships books to a bookstore.
_____________________
5 A computer manufacturer receives silicon
chips and puts them into minicomputers. _____________________
6 A dentist repairs a child’s broken tooth. _____________________
7 A train moves truck parts across the country. _____________________
8 A grocer exchanges groceries for money. _____________________
9 A waitress takes order for lunch. _____________________
10 A farmer plants vegetables for harvest in the
fall. _____________________
B. With your partner, write down real-life situations that would fit into the
categories of production, distribution, and sale. For examples, see the
preceding exercise.
Production: _____________________________________________________
Distribution: ____________________________________________________
Sale: __________________________________________________________
Writing
Write a paragraph about a business operation with which you are familiar.
Include the categories of production, distribution, and sale in your description.
Example:
From the initial drilling for oil to the final sale of gasoline at the pump, oil
passes through a variety of stages. After the oil has been taken from the ground,
it is refined into gasoline during the production process. Then the gasoline is
taken from the refinery and shipped by either truck or rail. It is sold to
wholesalers who distribute it, or it is directly distributed by the company to the
gas stations. Finally, the gasoline is purchased by customers who need it for their
cars, trucks, or other vehicles.
7
Unit 2
Careers in Business
1. Have you ever had a job? Describe your most interesting one. How did you get
it? What training or skills were required? What kinds of duties did you
perform?
_______________________________________________________________
_______________________________________________________________
_______________________________________________________________
2. Name some of the different fields of business in which a person may work,
such as marketing. Then list some of the specializations within the different
fields. For example, within marketing one may specialize in advertising or
selling.
marketing advertising
__________________________
__________________________
3. Before selecting a career (the chosen work of one’s life), what should a
person try to find out about himself or herself and the job?
_______________________________________________________________
_______________________________________________________________
_______________________________________________________________
_______________________________________________________________
Vocabulary
Below is a list of terms that you will find in the text. As you read “Careers in
Business,” see if you understand each term. Use this as a working list and add
8
Career offer suitable consequently
Variety specialize in available ___________
Field __________ _____________ ___________
Salary __________ _____________ ___________
Aptitude __________ _____________ ___________
Demand __________ _____________ ___________
Advancement __________ _____________ ___________
Reading Passage
CAREERS IN BUSINESS
Business is an increasingly important activity throughout the world today.

Consequently, the opportunities for a business career have grown in variety and
number. There are now five broad fields, or areas, or business that offer exciting
careers.
5  management
 marketing
 accounting
 finance
 computers and data processing
10 Within each of these fields are specific jobs in which you can specialize. For example,
within the field of marketing you can specialize in market research, advertising,
buying, selling, or distribution. The figure below shows general career opportunities
that are available in the various fields of business.
Business Fields and Careers
MANAGEMENT MARKETING ACCOUNTING FINANCE COMPUTER &

DATA
 General Manager  Researcher  Bookkeper  Banker PROCESSING
 Personnel Manager  Advertiser  Private  Financial
 Production Manager  Buyer  Accountant Analyst  Comp. Operator
 Comp.
 Seller  Public  Stockbroker Programmer
 Distributor Accountant  Systems Analyst
 Govt.
Accountant
Figure 1
15 In choosing a business career, there are several questions you may want to ask. For
instance, does the work interest you? Are there any areas of business for which you
have an aptitude or special capability? What are the opportunities involved, such as
salary, chance for advancement, and demand (or need) for the job? Answers to these
kinds of questions and careful planning will help you choose a suitable and successful
career in business.
9
Comprehension
A. Answer the following questions about business careers. Questions with

asterisks(*) cannot be answered directly from the text.
1. What are five different fields of businesses?

2. What are some specializations within the field of finance?
3. What are some different types of managerial careers?
4. What field of business is shown in the box on the far right of Figure 1?
5. What are some specializations within this field?
6. In the box that is second from the left, what information is presented?
7. What kinds of questions should you ask in order to choose a suitable and
successful career?
8. The reading passage states, “Business is an increasingly important activity
throughout the world today.” *Does this general statement apply to your
own country? *Why or why not?*What opportunities are there for
business careers in your country?
9. *Can you add any more business fields or careers to Figure 1? If you do not
know the names in English, describe the work.
B. Circle the letter of the answer that best completes each of the sentences
below.
1. The opportunities for a business career have:

a. not grown in variety or number
b. grown in variety and number
c. grown in number but not variety
d. grown in variety but not in number
2. A person working in computers and data processing may specialize in:

a. computer programming
b. computer operating
c. systems analyzing
d. all of the above
3. A bookkeeper is a specialist within the field of:

a. accounting
b. data processing
c. finance
d. marketing
4. In choosing a business career, one might ask questions regarding:

a. one’s area of interest
b. one’s aptitude
10
c. job opportunities
d. all of the above
A. Substitute appropriate terms for the italicized words or phrase in the

sentences below.
careers field aptitude advancement consequently

variety offer suitable specialize in salary
1. Because computers and data processing is a growing field, the opportunities

for upward movement are great. Advancement
2. There is a wide range of careers in the business world. _____________
3. The employee quit his job because of the poor amount of money.
____________
4. The area of marketing offers different types of jobs, such as advertiser or
distributor. ______________________
5. The computer programmer had a(n)appropriate job because he didn’t like to
work with people . ____________________
6. Business professions offer opportunities in the areas of management,
marketing, accounting, finance, and computers and data processing.
__________
7. Because the young accountant had a(n) special capability for mathematics, he
aptitude
was very successful. _____________
8. A person may train in different types of management, such as personnel or
offer
production management. _______________________
B. Fill in the blanks below with the most appropriate terms from the list.
various demand offer specialize in salary

career aptitude advancement suitable field
Within the field of accounting, there are a number of areas that you might
______________. These include bookkeeping and the ____________types of
accounting. In order to choose the specific accounting job that is most
_____________, you might ask yourself how much this type of work interests you
and if you have any ____________for organizing financial data. You might also
consider the average _________earned by a bookkeeper or accountant and the
demand the work, particularly for the area in which you hope to live.
current _________for
Opportunity for _____________in the accounting field is another factor that you,
as a prospective bookkeeper or accountant, may wish to consider.
11
Text Analysis
1. What does each of the following refer to?

10 each of these fields ________________________
19 these kinds of questions ________________________
2. In the reading passage, two transition phrases are used to give examples.
What are these two phrases? What examples do they introduce?
TRANSITION PHRASES EXAMPLES
__________________________
__________________________ ___________________________
3. A transition word is used in the reading passage to show a result, What is this
transition?
___________________________ ___________________________
(transition) (result)
4. Writers sometimes ask questions in order to focus and intensify the reader’s
interest. When the reader comes to one of these questions, he or she
generally pauses and considers the question before going on. An answer is
not expected. This type of question is known as a “rhetorical question”.
Find three rhetorical questions in the reading passage and write them below.
a. _____________________________________________________________
_____________________________________________________________
b. _____________________________________________________________
_____________________________________________________________
c. ____________________________________________________________
_____________________________________________________________
5. Write definitions for the following business fields by matching a field on the
left with a definition on the right. Use this definition form:
term being defined verb to be definition
Management, marketing, accounting, finance, and computers and data

processing may also be defined as separate classes with members of their own.
Fill in the blanks below, based on the information provided.
12
Class: ___________________ Class: Management Careers
Members Researcher Members: ____________________
___________________ ____________________
___________________ ____________________
___________________ ____________________
___________________ ____________________
Class: Finance Class : Business fields
Members: ___________________ Members: ____________________
___________________ ____________________
_____stockbroker____ ____________________
___________________ ____________________
___________________ ____________________
B. In each of the examples below, three of the items are members of the same
class and one is not. Cross out the one that is not a member. Then write the
name of the class to which the other three belong.
CLASS
1. buyer/banker/seller/distributor ____marketing careers_
2. banker/financial analyst/stockbroker/accountant ____________________
3. computers and data processing/finance/marketing/ ____________________
General manager
4. computer operator/computer programmer/data ____________________
processing/ systems analyst
5. general manager/management/production ____________________
manager/personnel manager
6. advertising/management/marketing/accounting ____________________
7. private accountant/banker/government accountant/____________________
bookkeeper
Information Transfer
Where Women Are Employed in the U.S
Figure 2
13
A. Scan figure 2 to answer these questions.
1. For each pair of words, circle one word that applies to this graph.
a. men/women
b. employed/unemployed
c. all the world/U.S
d. percentage/total number
e. bar graph/pie graph
2. Using the words circled, write a sentence to summarize the information

provided in this graph.
_______________________________________________________________
_______________________________________________________________
3. What percentage of women are employed as schoolteachers?_____________
What percentage are employed as blue-collar workers?__________________
4. Which kind of work employs 21% of women? __________________________
7%? _______________
5. Which area employs the largest percentage of women? __________________
Which are employs the smallest? _________________
6. How many categories of work does this graph include? __________________
14
Unit 3
Why Nations Trade

1. What are some advantages of international trade? Consider this from the
perspectives of both importer and exporter.
_____________________________________________________________
_____________________________________________________________
_____________________________________________________________
2. What are some disadvantages of international trade? Again, consider both

parties.
_____________________________________________________________
_____________________________________________________________
_____________________________________________________________
3. What commodities does your country export? What are the biggest imports?
_____________________________________________________________
_____________________________________________________________
_____________________________________________________________
Vocabulary
Below is a list of terms that you will find in the text. As you read “Why Nations
Trade,” see if you understand each term. Use this as a working list and add other
terms that you do not know.

resource restrict national efficiently
output import global domestically
standard of living lack scarce __________
expertise export advantageous __________
absolute advantage suit ____________ __________
comparative enable ____________ __________
advantage ___________ ____________ __________
____________ ___________ ____________ __________
____________ ___________ ____________ __________
15
WHY NATIONS TRADE
The sale of goods and services is not restricted to local, regional, or
national markets; it often takes place on an international basis. Nations
import goods that they lack or cannot produce as efficiently as other
nations. This exchange of goods and services in the world, or global
5 market is known as international trade. There are three main benefits to
be gained from this type of exchange.
First, international trade makes scarce good available to nations that
need or desire them. When a nation lacks the resources needed to
produce goods domestically, it may import them from another country.
10 For example, Saudi Arabia import automobiles; the United States,
bananas, and Mexico, computers.
Second, international trade allows a nation to specialize in production
of those goods for which it is particularly suited. This often results in
increased output, decreased costs, and a higher national standard of
15 living. Natural, human, and technical resources help determine which
products a nation will specialize in. Saudi Arabia is able to specialize in
petroleum because it has the necessary natural resource; Mexico is able
to specialize in the production of wooden furniture because it has the
human resources to assemble the furniture by hand; and the United
20 States is able to specialize in the computer industry because it has the
technical expertise necessary for design and production.
There are two economic principles that help explain how and when
specialization is advantageous. According to the theory of absolute
advantage, a nation ought to specialize in the goods that it can produce
25 more cheaply than its competitors or in the goods that no other nation is
able to produce. According to the theory of comparative advantage, a
nation ought to concentrate on the products that it can produce most
efficiently and profitably. For example, a nation might produce both grain
and wine cheaply, but it specializes in the one that will be more profitable.
30 The third benefit of international trade is its political effects. Nations
that trade together develop common interests that may help them
overcome political differences. Economic cooperation has been the
foundation for many political alliances, such as the European Community
(EC), founded in 1957.
35 International trade has done much to improve global conditions. It
enables countries to import goods they lack or cannot produce
domestically. It allows countries to specialize in certain goods with
increased production and decreased prices. Finally, it opens the channel
of communication among nations.
16
A. Answer the following questions about international trade. Questions with
asterisks(*) cannot be answered directly from the text.
1. What are the various markets in which the sale of goods and services takes
place?________________________________________________________
2. What is international trade?______________________________________
3. What is the first benefit of international trade?_______________________
4. What is one commodity that Mexico imports? *Why?__________________
5. What resources help determine which products a nation will specialize
in?__________________________________________________________
6. *Which of these resources is most abundant in your country?___________
7. According to the theory of comparative advantage, what should a nation
do?__________________________________________________________
8. *Can you give an example to show how this theory has worked in your
country? Explain._______________________________________________
9. What is the third benefit of international trade?______________________
10.*What are some examples, other than the European Community, of how
Economic Cooperation has helped overcome political differences?
____________________________________________________________
B. Circle the letter of the answer that best completes each of the following
sentences.
1. Nations import goods they:

a. produce efficiently
b. specialize in
c. lack or cannot produce efficiently
d. do not need or desire.
2. Specialization often results in:

a. increased output
b. decreased costs
c. higher standard of living
d. all of the above
3. The United States is able to specialize in the computer industry because of

its_________resources.
a. natural
b. technical
c. human
d. international
4. According to the theory of comparative advantage, a nation should

concentrate on the product that:
17
a. it can specialize in
b. no other nation can produce
c. it can make efficiently
d. it can produce most efficiently and profitably
5. The European Community is based on:

a. cooperation
b. one company
c. competition
d. political differences
A. Substitute appropriate terms for the italicized words or phrases in the

following sentences.
global domestic suit expertise resource

output enables lack efficiently scarce
1. Diamonds are found in only a few places in the world; they are rare.scarce
______
2. The production of the factory increased when ten new workers were hired.
output
__________________.
3. Nations that are without technological resources cannot produce their
lack
computer systems. ______________.
4. International trade has affected worldwide conditions in numerous ways.
global
_______________.
expertise
5. Specialized knowledge is necessary to design fax machines. ____________
domestic
6. Many small businesses focus only on the home market. _______________
resource
7. Oil is a valuable asset. __________
8. International trade makes it possible for countries to import goods that they
enable
cannot produce. ___________
B. Complete the sentences with the noun, verb, and adjective forms provided.
1. restriction/is restricted/restrictive
restriction
a. A_________limits the number of workers that can be hired.
is restricted national markets.
b. Trade _________not ___________to
restrictive
c. A ____________trade law is one that controls the number of goods
imported or exported.
2. specialization/specializes/specialized
specializes
a. Generally a nation that_______________in certain products can increase
output.
specialized
b. Research and development is a _____________area of marketing.
18
specialzation
c. America’s __________in agriculture has made it a leading producer of
grain.
3. Importation/imports/imported
a. The United Statesimports

______coffee.
imported
b. __________goods are sometimes subject to a special tax.
c. The continued U.S dependence on theimportation
__________of oil is a controversial
issue.
4. production, produces, productive
production steel is an important industry in a development

a. The ____________of
economy.
b. Managers try to motivate employees to be efficient andproductive
________.
c. Franceproduces
______excellent wines.
5. suitability/is suited/ suitable
suitable
a. Because California has a warm climate, oranges are a ____________product
for it to specialize in.
b. Thesuitability
_________of a particular specialization is determined by the country’s
resources.
is
c. Because of its cold climate, Sweden __________not suited
__________to
specialize in coffee or bananas.
Text Analysis
Look at the reading to answer these questions.

6. this type of exchange _______________
8. them _______________
12 this _______________
26 one _______________
2. The reading discusses three benefits of international trade. What are these
three benefits?
a. _____________________________________________________________
b. _____________________________________________________________
c. _____________________________________________________________
19
3. What connective words or phrases are used to introduce each benefit?
_____________________________________________________________
CONNECTIVES BENEFITS
a. ______________________ _______________________
b. ______________________ _______________________
c. ______________________ _______________________
4. What are some other connective words or phrases that could have been used
instead of second and third?
a. _______________________
b. _______________________
5. The reading discusses the resources that help determine in which products a
nation will specialize. The possession of a particular resource may be thought
of as a cause and the resultant specialization may be seen as an effect. List the
cause/effect specialization relationships for Saudi Arabia, Mexico, and the
United States.
cause
effect
a. Saudi Arabia has the natural resource problem.
Saudi Arabia has specialized in petroleum.
b. Mexico
______________________________________________________________
c. ______________________________________________________________
______________________________________________________________
Classification
Some possible results of international trade are listed below. Look at each
situation and determine whether it concerns countries that import or export.
Then decide whether it is an advantage or a disadvantage for those nations.
Enter the number of the situation in the appropriate area of the grid.
20
1. A greater variety of goods is available.
2. Foreign competition endangers domestic industries.
3. A larger market is now available.
4. A nation becomes too dependent upon its foreign markets.
5. More jobs are created.
6. Gross National Product (GNP) is increased.
7. A nation becomes too dependent on foreign products.
8. For economic reasons, a country prefers to sell to foreign markets rather than
deal with its domestic market.
9. Domestic workers lose employment.
10. A nation imports natural resources rather than depleting its own sources.
11. The international market gets flooded.
12. The national standard of living is raised.
Importing Exporting
nations nations
Advantage 1
Disadvantage
Writing
Write a paragraph describing a product your country has specialized in. Include
in your paragraph information about resources, economic theory, and results.
Example:
One of the products that Japan has chosen to specialize in is production of
cameras. Because of its technical resources, Japan has the knowledge
required to design and produce sophisticated cameras; because of its human
resources, Japan has a workforce that large enough to produce these cameras
on a competitive basis. According to the theory of comparative advantage,
Japan has chosen to specialize in production of cameras because it can
produce them cheaply than it can a number of other goods. Japan’s
specialization in cameras has resulted, among other things, in increased
domestic employment, more money coming into the country, and a higher
standard of living.
21
Unit 4
The Four P’s

1. What do you think of when you see the term marketing? Write down ideas.
_______________________________________________________________
______________________________________________________________
2. Can you list the various steps or actions that are involved in the marketing
process? (Think of all the steps that must take place to get goods and services
to the customer.)
3. Now write a definition of marketing using some of the ideas and steps listed in
Questions 1 and 2.
Marketing is
Compare your definition with the ones written by your classmates. Add to your
definition if you find any new information.
Vocabulary
Below is a list of terms that you will find in the text. As you read “The Four
P’s’. See if you understand each term. Use this as a working list and add other
marketing satisfy complex popularly

objective achieve vital __________
element insure personal __________
the four P’s charge ___________ __________
option price ___________ __________
competitor take place ___________ __________
price leader _____________ ___________ __________
channel of _____________ ___________ ___________
distribution _____________ ___________ ___________
wholesaler _____________ ____________ ___________
22
retailer _____________ ____________ ___________
promotion _____________ ____________ ___________
Reading Passage
THE FOUR P’s
Buying, selling, market research, transportation, storage, advertising—these

are all part of the complex area of business known as marketing. In simple
terms, marketing means the movement of goods and services from
manufacturer to customer in order to satisfy the customer and to achieve the
5 company’s objectives. Marketing can divided into four main elements that are
popularly known as the four P’s:
 product
 price
 placement
10  promotion
Each one plays a vital role in the success or failure of the marketing operation.
The product element of marketing refers to the good or service that a
company wants to sell. This often involves research and development (R&D) of
a new product, research the potential market, testing of the product to insure
15 quality, and then introduction to the market.
A company next considers the price to charge for its product. There are three
pricing options the company may take: above, with or below the prices that its
competitors are charging. For example, if the average price of a pair of women’s
leather shoes is $47, a company that charges $43 has priced below the market;
20 a company that charges $47 has priced with the market and the company that
charges $53 has priced above the market. Most companies price with the
market, selling their goods and services for average prices established by major
producers in the industry. The producers who establish these prices are known
as price leaders.
25 The third element of the marketing process—placement—involves getting
the product to the customer. This takes place through the channels of
distribution. A common channel of distribution is:
manufacturer wholesaler retailer customer
Wholesalers generally sell large quantities of a product to retailers, and retailers
30 usually sell smaller quantities to customers.
Finally, communication about the product takes place between buyer and
seller. This communication between buyer and seller is known as promotion.
There are two major ways promotion occurs: through personal selling, as in a
35 department store; and through advertising, as in a newspaper or magazine.
The four elements of marketing—product, price, placement, and promotion—
23
work together to develop a successful marketing operation that satisfies
customers and achieves the company’s objectives.
E.Jerome McCarthy, Basic Marketing (Homewod, III: Richard D.Irwan, Inc., 1971). Pp.44-46
Comprehension
A. Answer the following questions about marketing. Questions with asterisks

(*) cannot be answered directly from the text.
1. What is marketing? Marketing means_______________________________

2. *How does the definition of marketing that is given in the reading passage
differ from the one that you wrote?________________________________
3. What are the four main elements of marketing?______________________
4. What is involved in the product element of marketing? ________________
5. What are the three pricing options that a company may take?___________
6. *Using $275 as an average price for word processing software, what are
examples of pricing above, with and below the market?________________
below.
1. The four main elements of marketing are popularly known as:

a. the movement of goods and services
b. the four P’s
c. the four M’s
d. buying, selling, market research, and storage.
2. The product element refers to:

a. the four P’s
b. testing of a product to insure quality.
c. the good or service that a company wants to sell.
d. getting the product to the customer
3. Most companies are:

a. with the market
b. below the market
c. beyond the market
d. above the market
4. A common channel of distribution is:

a. wholesaler—retailer—manufacturer—customer
b. manufacturer—retailer—wholesaler—customer
c. retailer—manufacturer—wholesaler—customer
24
d. manufacturer—wholesaler—retailer—customer
5. The two major forms of promotion are:

a. radio and television
b. personal selling and advertising
c. personal selling and newspapers
d. selling advertisements
A. Write down any terms that you did not understand in the reading
passage. Find each term in the reading, look at its context, and try to
figure out the meaning. Discuss these terms with your classmates.
B. Look at the terms in the left-hand column and find the correct synonyms
or definitions in the right-hand column. Copy the corresponding letters in
the blanks.
1 e insure (line 14) a. choice

2 ____retailer (line 29) b. set as a price
3 c. one who sells in small
_____price with the market(line 20) amounts to customers
4 _____option (line 17) d. please
5 _____competitor (lines 17-18) e. guarantee
6 _____personal (line 33) f. the path goods take when
moving from manufacturer
to customer.
7 g. private, relating to an
_____objective (line 36) individual
8 _____satisfy (line 38) h. accomplish
9 _____take place (line 31) i. charge an average price
10 _____channel of distribution (line 26) j. occur, happen
11 _____charge (line 18) k. rival; opponent
12 _____achieve (line 36) l. goal
C. Fill in the blanks with the most appropriate terms from the list
vital insure retailer prices placement

whosaler price leader take place charge channel of distribution
The most common channel of distribution is manufacturer wholesaler

______ consumer. Distribution can, however, ___________through
slightly modified channels. For example, products are sometimes sold
directly by the _______ or the manufacturer, rather than by the retailer.
25
Generally, wholesalers___________ lower __________than retailers and
sell in larger quantities. Together, these channels of distribution play a
______________role in the _________________element of marketing.
Text analysis

1 these ___________________
11 each one ___________________
13 R&D ___________________
25 this ___________________
2. The reading discusses the four elements of the marketing operation. What
are these four parts?
a. _________________________________________________________
b. _________________________________________________________
c. _________________________________________________________
d. _________________________________________________________
3. What connective words or phases, if any, are used to introduce each

marketing element? If no connective is used, indicate this with .
CONNECTIVES MARKETING ELEMENTS
a. ____________________ ________________________
b. ____________________ ________________________
c. ____________________ ________________________
d. ____________________ ________________________
4. a. In line 6, what does the number mean?

_____________________________________________________________
b. What is the information at the bottom of the page called?
_____________________________________________________________
c. Why is reference made to Basic Marketing?
_____________________________________________________________
Various problems that might occur in the marketing process are listed below.
Determine which of the four P’s each problem is most closely related to. Mark
the appropriate category of product, price, placement, or promotion with an X.
PRODUCT PRICE PLACEMENT PROMOTION

1 The advertising
gives false
information.
__________ __________ __________ __________
26
2 The product is
dangerous.
__________ __________ __________ __________
3 The product is
not available in
enough stores.
__________ __________ __________ __________

4 The product is
too expensive.
__________ __________ __________ __________
5 A Salesclerk is
rude. __________ __________ __________ __________
6 The product is
sold during the
wrong season.
__________ __________ __________ __________

7 The product is
of poor quality.
__________ __________ __________ __________
8 The advertising
is offensive.
__________ __________ __________ __________
9 The price of a
product
increases
faster than the
rate of
inflation. __________ __________ __________ __________
10 The product is
not available in
your favorite
stores.
__________ __________ __________ __________
27
Writing
I. Read the following letter of complaint about dangerous product. It is written to be sent as a
fax (facsimile transmission).
FACSIMILE TRANSMISSION
TO : Product Safety Manager
LOCATION : L & r Toy Company
FAX TEL : (302) 326-4610
FROM : Susan T.and Donald E.Murphy
LOCATION : 2473 N.E 15th Street, Portland, Oregon 97201
FAX TEL : (503) 745-2389
DATE : November 14, 1993
Dear Product Safety Manager:
In September of this year we purchased a toy truck (product# 17348) from

a retail outlet in Portland. Our son, who is four years old, was playing with the
truck about two weeks later when he severely cut his hand on a sharp edge
inside the right door of the truck.
When we returned the truck to the store, the manager refunded our
money and apologized for what happened to our son. He said that he would
report the accident to the manufacturer, L&R Toy company. However, he said
he would continue to sell the toy trucks in his store unless he was notified to
return them to L&R Toy Company.
We feel that L&R Toy Company must immediately recall product # 17348
from the market and stop selling this toy until it is safe for children to play
with. No other children should be hurt by the sharp edges in the way our son
was.
We await your prompt reply and resolution of this safety problem.
With your partner, write a response to Susan and Donald Murphy or write your own letter
of complaint. Send it as a fax or letter.
28
Unit 5
Why Finance?

1. What are some of the primary considerations for an owner starting up a
business?
_______________________________________________________________
2. How does a company use its money or capital?
________________________________________________________________
3. An individual as well as a company needs to borrow money. When an
individual borrows money, it is known as personal banking. Personal financing
can obtained through a short-term or long term arrangement. What are some
examples of short-term and long-term individual financing?
Short-term financing: change accounts______________________________

____________________________________________
____________________________________________
Long-term financing: mortgage on a house___________________________
____________________________________________
____________________________________________
Vocabulary
Below is a list of terms that you will find in the text. As you read “Why
Finance?” see if you understand each term. Use this as a working list and add

consideration purchase primary similarly
funds utilize external ___________
capital start up _____________ ___________
investment support _____________ ___________
finance acquire _____________ ___________
credit extension last _____________ ___________
charge account obtain _____________ ___________
arrangement expect _____________ ___________
_____________ repay _____________ ___________
_____________ _____________ _____________ ___________
29
Reading Passage
WHY FINANCE?
One of the primary considerations when going into business is money.

Without sufficient funds a company cannot begin operations. The money
needed to start and continue operating a business is known as capital. A new
business needs capital not only for ongoing expenses but also for purchasing
5 necessary assets. These assets—inventories, equipment, buildings, and
property—represent an investment of capital in the new business.
How this new company obtains and uses money will, in large measure,
determine its success. The process of managing this acquired capital is
known as financial management. In general, finance is securing and utilizing
10 capital to start up, operate, and expand a company.
To start up or begin business, a company needs funds to purchase
essential assets, support research and development, and buy materials for
production. Capital is also needed for salaries, credit extension to
customers, advertising, insurance, and many other day-to-day operations.
15 In addition, financing is essential for growth and expansion of a company.
Because of competition in the market, capital needs to be invested in
developing new product lines and production techniques and in acquiring
assets for future expansion.
In financing business operations and expansion, a business uses both
20 short-term and long-term capital. A company, much like an individual,
utilizes short-term capital to pay for items that last a relatively short period
of time. An individual uses credit cards or charge accounts for items such as
clothing or food, while a company seeks short-term financing for salaries
and office expenses. On the other hand, an individual uses long-term capital
25 such as bank loan to pay for a home or car—goods that will last a long time.
Similarly, a company seeks long-term financing to pay for new assets that
are expected to last many years.
When a company obtains capital from external sources, the financing can
be either on a short-term or a long-term arrangement. Generally, short-term
30 financing must be repaid in less than one year, while long-term can be repaid
over a longer period of time.
Finance involves the securing of funds for all phases of business
operations. In obtaining and using this capital, the decisions made by
managers affect the overall success of a company.
30
Comprehension
A. Answer the following questions about finance. Questions with asterisks (*)
cannot be answered directly from the text.
1. What does a company need in order to begin operation?

_______________________________________________________________
2. What is capital? *Where can capital be acquired?
_______________________________________________________________
3. Why does a new business need capital? *What are some examples of ongoing
expenses that a company encounters?
_______________________________________________________________
4. What is finance?
_______________________________________________________________
5. Why does a company use both short-term and long-term capital?
_______________________________________________________________
6. How might a business utilize the short-term capital that it has borrowed?
_______________________________________________________________
7. What is the repayment period for short-term financing? For long-term
financing?
_______________________________________________________________
8. *Have you ever financed anything on a short-term or long-term
arrangement? *Explain.
_______________________________________________________________
9. *What are some items for which a company might seek short-term financing?
*Long-term financing?
_______________________________________________________________
B. Determine which of the following statements are true and which are false.
Then, put T or F in the blanks.
1. ____ Long term financing is used by a company to purchase new equipment

and to construct additional facilities.
2. ____ A new business only needs capital to meet day-to-day expenses.
3. ____ In financing business operations, a company relies almost entirely on
short-term financing.
4. ____ Long-term and short-term financing may be acquired from the outside
sources.
5. ____ How well a company manages its finances affects the overall success of
the business venture.
31

sentences below.
acquire utilizes primary arrangement last

external consideration repaid expect  capital
1. Although Ms. Robinson and her partners had already defined their new
product line, they were still searching for the money needed to purchase
equipment and materials. _____Capital____________
2. In general, a business that is able to manage its finances successfully will

continue to exist, _________________
3. One of the chief elements in financial planning is achieving the correct balance
between long-term and short-term capital. ________________
4. A company needs sufficient funds to obtain necessary assets, such property,

buildings, and inventories. ______________
5. When a company wants to expand, one factor that always affects this decision
is cost. __________
6. In making investments, a financial manager uses a wide variety of information

provided by all departments of the company. ______________________
7. When an individual or a company borrows money from a bank, this money

must be paid back by a specific date. __________________________
8. Owners anticipate that the company will use fixed assets for many years.
_________________________________________
B. Fill in the blanks with the most appropriate terms from the list.
Similarly capital primary short-term support

Consideration purchase  start up arrangements finance
The Cunhas were planning to _start up____ a small retail business. Before
making the final decision, they looked at the amount of personal
__________they had to invest. The remaining funds they would have to
____________ through various _________and long term ___________. Another
___________was the type of equipment they would have to ________initially.
_________________, the Cunhas evaluated the costs of inventory, employee
32
salaries and benefits, and other general expenses. After reviewing all these
factors, the Cunhas decided to open their business.

5 these assets ______________________
8 its ______________________
31 this capital ______________________
2. In lines 22-23, a connective phrase is used to show contrast. Find the

connective phrase and copy it below. Then write down the concepts that are
being contrasted.
_________________ __________________/ ________________
(connective) (concepts being contrasted)
3. What are each of the following examples of?

LINES WORDS EXAMPLES
5 inventories, equipment, buildings, _______________
and property _______________
23 clothing and food _______________
25 this capital _______________
4. What does a new business need capital for?

a. ____________________________________________________________
b. ____________________________________________________________
5. Two terms are defined in the reading using this form:

definition verb to be known as term being defined
Find and copy these definitions in the spaces below.
a. The money needed to start up and continue operating a business is
_____________________________________________________________
______________________________________________________________
______________________________________________________________
b. _____________________________________________________________
______________________________________________________________
Classification
Classify the following real-life situations. First decide whether they are
examples of short-or long-term financing. Then classify them according to the
specific uses of the funds.
33
SHORT-TERM USES OF FUNDS LONG TERM USES OF FUNDS
(CURRENT ASSETS) (FIXED ASSETS)
 inventories  equipment
 accounts receivable  buildings
 cash  property
 marketable securities
1. To deal with the complexities of inventory control, an electrical wholesale

business purchases a minicomputer.
_________long term____________ / __________equipment____________
2. In order to locate its manufacturing site close to the natural resource required
for production, a timber company constructs a new plywood mill.
____________________________/ ________________________________
3. An American toy manufacturer increases production during the summer

months in anticipation of pre-Christmas purchases in the fall.
____________________________/ _________________________________
4. Anticipating the need for more employee and customer parking, a local
department store purchases a vacant lot adjacent to its store.
____________________________/ _________________________________
5. Foreseeing the need to implement a second shift on a production line, an auto
manufacturer carries an unusually large balance in the corporate payroll bank
account.
____________________________/ _________________________________
6. Because a local book wholesaler suddenly receives an influx of early payments
from its customers, the business purchases 90-day certificates of deposit
through its bank.
____________________________/ __________________________________
7. A construction company yielded a higher-than-expected return in a recent
project, and with these funds it acquires a future industrial park site.
___________________________/ ___________________________________
8. To promote a new product in its initial phases of marketing (the first six
months), a small appliance manufacturer offers special terms to retailers to
introduce this product line.
___________________________/ ___________________________________
9. In order to maximize the shipping efficiency of a container, a farm equipment
manufacturer retains a number of smaller orders until a large shipment can be
made.
___________________________/ ____________________________________
10. A real estate investment firm assists in the loan application process of an
insurance company that is building a new downtown office complex.
34
__________________________/ _____________________________________
Writing
Write a letter to a bank or savings-and-loan institution inquiring about the

types of short-and long-term financing available. Write the letter either as an
individual seeking financial information or as the representative of a company
needing addition capital.
Example:
FACSIMILE TRANSMISSION
TO : Anna Alvarez, Manager
LOCATION: Business Finance Dept, National City Bank
FAX TELP : (503) 929-4837
FROM : James Smith, President
LOCATION : West Coast Industries

721 Market Street, San Francisco, CA 94109
FAX TEL: (415) 338-5948
DATE: November 14, 1993
Dear Anna:
As we discussed last week at lunch, West Coast Industries (WCI) plans a major
expansion of its cold-storage warehouse based in Portland. In order to expand these
facilities, WCI will need a combination of short-and-long term financing. Our estimates
indicate a need for $1,500,000 for one year and $ 15, 750,000 for a term of ten years.
The long-term financing will, of course, be utilized for the construction of the new cold-
storage warehouse. Short-term financing will permit the purchase of additional
inventory.
Would National City Bank be able to provide WCI with a line of credit totaling
$17,250,000 for the purposes of this expansion project? Our executive committee
would welcome the opportunity to discuss this proposal in detail with bank’s board
directors at the earliest possible date. Your assistance in arranging a meeting would be
most appreciated.
35
Unit 6
An Accounting Overview

1. What do you think of when you see the term accounting? Quickly write down
words or ideas as they come into your mind.
_______________________________________________________________
_______________________________________________________________
2. What steps or actions does an accountant take in order to provide accurate

financial information about a company?
_______________________________________________________________
_______________________________________________________________
3. Are there different types of accountants in your country? Explain what kind of
work they do and for whom they work.
______________________________________________________________
______________________________________________________________
Vocabulary
Below is a list of terms that you will in the text. As you read “An Accounting
Overview,” see if you understand each term. Use this as a working list and other

party communicate informed while
status interpret standardized independently
procedure monitor rigorous solely
financial statement reflect _______________ whereas
agency allow _______________ ___________
fee earn _______________ ___________
_______________ fulfill _______________ ___________
_______________ hire _______________ ___________
_______________ maintain _______________ ___________
_______________ ______________ _______________ ___________
_______________ ______________ _______________ ___________
36
Reading Passage
AN ACCOUNTING OVERVIEW
Accounting is frequently called the “language of business” because of its
ability to communicate financial information about an organization. Various
interested parties, such as managers, potential investors, creditors, and the
government, depend on a company’s accounting system to help them make
5 informed financial decisions. An effective accounting system, therefore, must
include accurate collecting, recording, classifying, summarizing, interpreting,
and reporting of information on the financial status of an organization.
In order to achieve a standardized system, the accounting process allows
accounting principles and rules. Regardless of the type of business or the
10 amount of money involved, common procedures for handling and presenting
financial information are used. Incoming money (revenues) and outgoing
money (expenditures) are carefully monitored, and transactions are
summarized in financial statements, which reflect the major financial activities
of an organization.
15 Two common financial statements are the balance sheet and the income
statement. The balance sheet shows the financial position of a company at
one point in time while the income statement shows the financial
performance of company over a period of time. Financial statements allow
interested parties to compare one organization to another and/or to compare
20 accounting periods within one organization. For example, an investor may
compare the most recent income statements of two corporations in order to
find out which one would be a better investment.
People who specialize in the field of accounting are known accountants. In
the United States, accountants are usually classified as public, private, or
25 governmental. Public accountants work independently and provide
accounting services such as auditing and tax computation to companies and
individuals. Public accountants may earn the title of CPA (Certified Public
Accountant) by fulfilling rigorous requirements. Private accountants work
solely for private companies or corporations that hire them to maintain
30 financial records, and government accountants work for governmental
agencies or bureaus. Both private and governmental accountants are paid on
a salary basis, whereas public accountants receive fees for their services.
Through effective application of commonly accepted accounting systems,
private, public, and governmental accountant provide accurate and timely
35 financial information that is necessary for organizational decision-making.
37
Comprehension
A. Answer the following questions about accounting. Questions with asterisks

(*) cannot be answered directly from the text.
1. Why is accounting called the “language of business”?_________________

2. How is a standardized accounting system achieved?__________________
3. What are revenues and expenditures?_____________________________
4. What do the balance sheet and income statement have in common? How
are they different? ____________________________________________
5. *How might the information contained in financial statements be useful to
managers?* How might creditors use this information?_______________
6. How are accountants classified in the United States?__________________
7. What kinds of services do public accountants provide?_________________
8. What is a CPA? *Do you have a similar type of position in your country?
*Explain.______________________________________________________
9. * Which type of accounting—public, private, or governmental—appeals to
you the most?*Why?___________________________________________
10. *What are some management decisions that might be based on
accounting information?_______________________________________
below.
1. Accounting information is used by _____to help them make financial

decisions.
a. managers
b. potential investors
c. creditors
d. all of the above.
2. Regardless of the type of business or the amount of money involved:

a. all companies use identical accounting systems
b. balance sheets are more important than income statements
c. common procedures are used in handling financial information
d. no standardized accounting system is employed.
3. Business monetary transactions are summarized in :

a. bank books
b. financial statements
c. computers
d. cash registers
38
4. Public accountants may earn the title of CPA by:
a. becoming governmental accountants
b. paying a fee
c. fulfilling rigorous requirements
d. obtaining a Bachelor of Arts degree in accounting
5. Private and governmental accountants are paid on a ______basis.

a. salary
b. monthly
c. fee
d. weekly

sentences below.
status agencies monitored maintain independently

procedure fee hire  rigorous solely
1. Many accounting departments have strict entrance requirements; only the

most qualified applicants are allowed to enter these programs. Rigorous
2. The particular method used to process employee insurance claims may vary
from company to company. ________________
3. The stock market is closely watched every day. ______________
4. Rather than expand into foreign lines, the dress shop manager chose to
deal only with domestic fashion designers. ___________
5. Although the consultant’s charge for services was high, his guidance and
advice were well worth the money. ____________
6. The financial condition of a company is reflected in its financial statements.
__________
7. When the business began to expand, a second bookkeeper was brought in
to help keep the books. _________
8. In the United States there are numerous organizations that provide services
at the local, state, and national levels. ___________
B. Complete the sentences with the noun, verb, and adjective forms provided.
1. communication/to communicate/communicative
a. Supervisors should strive for two-way communication with their
employees.
b. By using an overhead projector, the guest speaker was able to
communicate his statistical information clearly.
c. Because of the clerk’s highly developed communicative skills, she was
given a position that required her to deal directly with customers.
39
2. information/informed/informative
a. The owner _________his employees that they would all receive a 5
percent pay increase.
b. Getting acquainted with Accounting, by John L.Carey, is a
very________book.
c. Financial ______________is essential for organizational decision making.
3. allowance/allowed/allowable
a. The supervisor lost control of his staff members after he ________them
to override his decisions.
b. When the factory was built 50 years ago, little________was made for
remodeling and expansion.
c. Although ________, smoking was discouraged in the lunch room.
4. fulfillment/fulfill/fulfilling
a. At times the assembly line worker felt a lack of professional_________.
b. When he was promoted to production supervisor, however, his job
became much more ________
c. Before the accountant could become a CPA, She had to _______________
5. standards/has standardized/standard
a. The _________________paper size in the United States for business
letters and memoranda is 8 ½ X 11 inches.
b. The computer department _________________ its procedures for storing
and retrieving data.
c. Nowadays rigorous ____________are enforced in the area of food
processing and packaging.
C. Fill in the blanks below with the most appropriate terms from the list.
parties  financial statement reflected standardized allows
whereas interpretations informed communicates rigorous
An income statement is one example of a financial statement. It

_____________financial information about a company over a period of
time. A ___________________format is used to compare one income
statement to another in order to make___________financial decisions. But
there is still a great deal of risk involved in financial decision making because
the information ___________in an income statement is subject to a variety
of _____________.
40
1 its _____________
4 them _____________
19 another _____________
21 one _____________
2. Which connective word in the reading is used to summarize information?

___________________________________________________________
3. Which connective phrase in the reading passage is used to illustrate a
point?
___________________________________________________________
4. Two terms are used to show contrast (lines 17 and 31). Find the terms
and copy them below. Then write down the concepts that are being
contrasted.
TERMS CONCEPTS BEING CONTRASTED
a. ________ ___________________/_____________________
b. ________ __________________/ _____________________
c. ________ __________________/ _____________________
Writing
Write a paragraph contrasting the three types of accountants. Begin your

paragraph in this way:
Public, Private, and Governmental Accountants Differ in Several Ways

__________________________________________________________________
__________________________________________________________________
__________________________________________________________________
__________________________________________________________________
__________________________________________________________________
__________________________________________________________________
__________________________________________________________________
__________________________________________________________________
__________________________________________________________________
__________________________________________________________________
__________________________________________________________________
__________________________________________________________________
__________________________________________________________________
__________________________________________________________________
__________________________________________________________________
41
Unit 7
The Balance Sheet

1. In order to work with a balance sheet, you need to understand two
fundamental terms. Match these two terms with the correct definitions:
assets and liabilities.
what a company owes = _______________

what a company owns = _______________
2. What are examples of a company assets?

_Equipment, accounts receivable.____________________________________
_______________________________________________________________
_______________________________________________________________
3. What are examples of company liabilities?

__long term notes, accounts payable_________________________________
_______________________________________________________________
_______________________________________________________________
4. Have you ever worked with a balance sheet? How did you make use of it?
_______________________________________________________________
_______________________________________________________________
_______________________________________________________________
Vocabulary
Below is a list of terms that you will find in the text. As you “The Balance
Sheet,” see if you understand each term. Use this as a working list and add
process own particular internally

condition owe receivable externally
asset represent monetary __________
property equal current __________
liability express payable __________
owners’ equity list long-term __________
42
accounting detail ____________ __________
equation ___________ ____________ __________
inventory ___________ ____________ __________
___________ ___________ ____________ __________
THE BALANCE SHEET

Financial statements are the final product of the accounting process.
They provide information on the financial condition of a company. The
balance sheet, one type of financial statement, provides a summary of what
a company owns and what it owns on one particular day.
5 Assets represent everything of value that is owned by a business, such
as property, equipment, and accounts receivable. On the other hand,
liabilities are the debts that a company owes—for example, to suppliers and
banks. If liabilities are subtracted from assets (assets – liabilities), the
amount remaining is the owners’ share of a business. This is known as
10 owners’ or stockholders’ equity. One key to understanding the accounting
transactions of a business is to This is often represented by the fundamental
accounting equation: assets equal liabilities plus owner’ equity. This is often
represented by the fundamental accounting equation: assets equal
liabilities plus owner’s equity.
ASSETS= LIABILITIES + OWNER’S EQUITY
15 These three factors are expected in monetary terms and therefore are
limited to items that can be given in a monetary value. The accounting
equation always remain in balance; in other words, one side must equal to
the other.
The balance sheet expands the accounting equation by providing more
20 information about the assets, liabilities, and owner’s equity of a company
at a specific time (for example, on December 31, 1993). It is made up of two
parts. The first part lists the company assets, and the second part details
liabilities and owner’s equity. Assets are divided into current and fixed
assets. Cash, accounts receivable and inventories are all current assets.
Property, buildings, and equipment make up the fixed assets of a company.
25 The liabilities section of the balance sheet is often divided into current
liabilities (such as accounts payable and income taxes payable) and long-
term liabilities (such as bonds and long term notes).
The balance sheet provides a financial picture of a company on a
particular date, and for this reason it is useful in two important areas.
Internally, the balance sheet provides managers with financial information
30 for company decision-making. Externally, it gives potential investors data
for evaluating the company’s financial position.
43
A. Answer the following questions about the balance sheet. Questions with
asterisks (*) cannot be answered directly from the text.
1. What is the final product of the accounting process?____________________

2. What is a balance sheet? _________________________________________
3. Does the balance sheet provide financial information for a long period of time
(for example, January to June 1993) or does it provide information for a
specific point in time? (for example, on June 30, 1993)? __________________
4. What is the difference between assets and liabilities? ____________________
5. How is owner’s or stockholders’ equity determined? _____________________
6. How can the relationship between assets, liabilities, and owners’ equity be
represented?_____________________________________________________
7. Does the accounting equation always remain in balance?*Why or why not?
8. How can a business use a balance sheet? *As a manager, how would you find
balance sheet useful?______________________________________________
B. Complete the balance sheet by writing in the correct terms from the list
below:
 assets current liabilities long term liabilities

liabilities fixed assets current assets
stockholders’ equity
International Manufacturing, Inc

Balance Sheet
December 31, 1993
Assets ____________
__________ ______________________
Cash $ 49,400 Accounts receivable $ 30,000
Accounts receivable 1,600 Income taxes payable 19,000
Inventories 53,000 Total $ 49,000
Total $104,000
______________________
__________ Bonds $ 20,000
Property $ 15,000 Long term notes 40,000
Buildings 50,000 Total 60,000
Equipment 10,000
Total $ 75,000 Total Liabilities $109,000
_____________________
Common Stock $ 47,000
Retained earnings 23,000
Total $ 70,000
Total liabilities and
stockholder’s equity $179,000
44
A. Write down any terms that you did not understand in the reading passage.
Find each term in the reading passage, look at its context, and try to figure
out the meaning. Discuss these terms with your classmates.
B. Look at the terms in the left-hand column and find the correct synonyms or
definitions in the right-hand column. Copy the corresponding letters in the
blanks.
1 … g….property (line 6) a. assets equal liabilities plus

owners’ equity.
2 ____equal (line 12) b. provide information item
by item.
3 ____ condition (line 12) c. indicate by words or
symbols.
4 ____ detail (line 21) d. have the same value as
5 e. a series of transactions,
changes, or functions that
bring about a particular
____ accounting equation (line 12) result.
6 ____ monetary (line 15) f. the existing circumstance
7  g. anything owned by a
____ process (line 1) person
8 ____ express (line 15) h. of or pertaining to money

1 they ______________________
9 this ______________________
11 this ______________________
15 these three factors ______________________
2. In line 6, what are property, equipment, and account receivable examples of?
________________________________________________________________
3. In line 7, what do suppliers and banks refer to?
________________________________________________________________
4. In lines 5-7, two different phrases are used to incorporate examples in the
reading passage. What are these phrases?
a. ______________________________________________________________
b. ______________________________________________________________
45
5. Another method of clarification by example is the use of mathematical
representations. From the reading passage, copy examples that use
mathematical symbols.
a. ______________________________________________________________
b. ______________________________________________________________
Classification
Categories of the balance sheet can be classified to show the relationship

between them. Fill in the following blanks based on the information provided in
the reading and in Figure 1 (Page 79).
Class: Assets Class : Liabilities

Members: Current Assets____ Members : ________________
________________ ________________
Class: Current Assets Class: ________________

Members: ________________ Members: Accounts payable
________________ ________________
________________ ________________
Class: ________________ Class: ________________

Members: ________________ Members: ________________
________________ ________________
_________________ ________________
Equipment ________________
Application
Using the information in the reading passage, answer the following questions.
Give reasons to support your answers.
1. Which of the following is not a fixed asset: office equipment, machinery,

marketable securities, land, and buildings? Why?
_______________________________________________________________
_______________________________________________________________
2. Are the following liabilities current or long-term: bank loans payable,

accounts payable, mortgage bonds payable, taxes payable, and long-term
notes payable? List each under the correct heading.
46
CURRENT LIABILITIES LONG-TERM LIABILITIES
______________________ _________________________
______________________ _________________________
______________________ _________________________
3. If a company’s assets are $ 140,017 and its liabilities total $ 74,215, what is the
owner’s (or stockholders’) equity? Explain how you arrived at this answer.
________________________________________________________________
________________________________________________________________
4. The fundamental accounting equation for Burns Manufacturing Company is:
Assets = Liabilities + Owner’s Equity

$40,000 = $0 + $ 40,000
In the business’s next transaction, the owner borrows $ 8,000 from the local bank
in the form of a loan. Which of the following statements accurately describes how
this transaction affects the accounting equation?
_____ a. Assets would increase by $ 8,00 and owners’ equity would decrease by
$ 8,000.
_____ b. Both assets and liabilities would decrease by $ 8,000.
_____ c. Assets would increase by $ 8,000 and liabilities would increase by $
8,000.
_____ d. Liabilities would increase by $ 4,000 and owners’ equity would
increase by $ 4,000.
5. Equity is the amount of money that remains when liabilities are subtracted
from assets (asset minus liabilities). Why is a distinction made between owners’
equity and stockholder’s equity?
________________________________________________________________
________________________________________________________________
________________________________________________________________
47
Information Transfer
Miles Laboratories, Inc

Balance Sheet
Year Ended December 31, 19__
Assets_ Liabilities_
Current Assets Current Liabilities_
Cash $ 8,814,000 Bank loans $ 38,242, 000
Accounts receivable $ 59,711,000 Account payable $ 39,745, 000
Inventories $ 68, 597,000 Taxes on income $ 5,613, 000
Other $ 11, 901,000 Current portion of
Total Current Assets $149,023,000 long-term debt $ 21,423, 000
Investments $ 14,173,000 Total current Liabilities $105,023,000
Fixed assets Long-term debt $ 85,864,000
Buildings $ 81,920,000 Deferred income tax $ 6,587,000
Machinery Other $ 573,000
and equipment $ 85, 882,000 Shareholder’s equity
Loss depreciation $ 70,025, 000 Preferred stock, none
Land $ 7,474, 000 Issued
Construction Common stock $ 10, 721,000
In progression $ 9,871, 000 Capital in excess of
Total fixed assets $ 115,122,000 par value of stock $ 39,640,000
Other assets Retained earnings $ 87,777,000
Goodwill and Less cost of
trademarks $ 53,910,000 Common stock held
Patents and in treasury $ 1,421,000
Processes $ 1,515,000 Total shareholder’s
Other $ 1,021,000 Equity $ 136,717,000
Total assets $ 334,764,000 Total liabilities and
shareholder’s equity $ 334,764,000
Figure 2
A. Scan figure 2 to answer these questions.

1. What is the long-term debt for Miles Laboratories, Inc.?________________
2. How much are the total current assets of this company? ______________
The total fixed assets?
3. Which current liability equals $ 5,613,000? _______________
4. Which type of asset is the highest current asset?_______________________
B. Refer to Figure 2 to answer these questions.

1. There is no total given for long-term liabilities in this balance sheet. Which
three categories should be added together to get this total?_____________
2. What is the accounting equation for Miles Laboratories, Inc, on December
31? (Assets= Liabilities + Owner’s Equity)____________________________
48
3. If Miles Laboratories, Inc., sells $ 50,000 in stock in order to raise capital for
a new warehouse, which figures in the balance sheet must be changed?
_____________________________________________________________
4. Which one of the items listed under shareholders’ equity must be subtracted
from the total shareholders’ equity rather than added to it?
_____________________________________________________________
49

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ENGLISH FOR GLOBAL ECONOMIC STUDIES

Designed By: Henry Falentino, S.Pd., M.S

ATMA JAYA CATHOLIC UNIVERSITY

Now discuss your notes with your classmates.

NOUNS VERBS ADJECTIVES OTHERS

1. What is one modern definition of business?

1. ____ Business is not just one activity but a combination of different

3. ____ Moving a truckload of oranges from the orchard to the supermarket is

4. ____ A salesclerk provides a service by answering customer’s questions.

a. Some companies hold exclusive ____________ rights for specific products.

a. How efficiently a company _________its products will in large measure

a. Items _____________in order to show the relationship between them.

a. When travelling from country to country, people ___________one currency

Look at the reading passage to answer these questions.

LINES WORDS REFERENTS

2. Transition words or phrases are used to clarify the relationships between

subject - object (singular) - predicate

TRANSITION WORDS PARTS OF DEFINITION

5. A definition may take this form:

Production is the changing of materials into

Classification means the grouping of items to show the relationship between

 1. Car 8. Video cassette recorder 15. Office equipment repair

A. Match these parts of the business definition to the following real-life

Iron ore is made into metal car parts. Production of goods

Business is an increasingly important activity throughout the world today.

MANAGEMENT MARKETING ACCOUNTING FINANCE COMPUTER &

A. Answer the following questions about business careers. Questions with

1. What are five different fields of businesses?

1. The opportunities for a business career have:

2. A person working in computers and data processing may specialize in:

3. A bookkeeper is a specialist within the field of:

4. In choosing a business career, one might ask questions regarding:

A. Substitute appropriate terms for the italicized words or phrase in the

careers field aptitude advancement consequently

1. Because computers and data processing is a growing field, the opportunities

various demand offer specialize in salary

Look at the reading passage to answer these questions.

1. What does each of the following refer to?

LINES WORDS REFERENTS

TRANSITION PHRASES EXAMPLES

Management, marketing, accounting, finance, and computers and data

2. Using the words circled, write a sentence to summarize the information

Discuss the following questions.

2. What are some disadvantages of international trade? Again, consider both

NOUNS VERBS ADJECTIVES OTHERS

1. Nations import goods they:

2. Specialization often results in:

3. The United States is able to specialize in the computer industry because of

4. According to the theory of comparative advantage, a nation should

5. The European Community is based on:

A. Substitute appropriate terms for the italicized words or phrases in the

global domestic suit expertise resource

a. The United Statesimports

4. production, produces, productive

production steel is an important industry in a development

5. suitability/is suited/ suitable

Look at the reading to answer these questions.

1. What does each of the following refer to?

LINES WORDS REFERENTS