Universitatea Spiru Haret

Facultatea de tiine Economice Bucureti

Anul I 2015-2016 (Semestrul 2)
Titular de curs: Lector univ. dr. Andrei NICULESCU

LIMBA ENGLEZ
Limbaj economic i financiar

SINTEZ
Manual: Andrei Niculescu - Essential English for Business and Finance Students, Editura Universitar,
Bucureti, 2014, ISBN 978-606-28-0034-52013;
Manual: Andrei Niculescu (coord.), The Language of Business - Accounting-Banking-Finance,
Andrei Niculescu, Sanda Marcoci, Cristina Crian, Vlad Clin,
Editura Fundaiei Romnia de Mine, Bucuresti 2007.

INTRODUCERE

Comunicarea n limbi strine este una dintre cele opt competene cheie stabilite de ctre
Comisia European i poate una dintre cele mai preferate competene percepute att n plan individual
ct i profesional alturi de competenele necesare utilizrii noilor tehnologii informaionale.
La facultile cu profil nefilologic studiul unei limbi strine nu constituie un scop n sine ci
devine, prin caracterul su aplicativ, o component a formrii profesionale supus astzi unor exigene
sociale i profesionale majore. ntruct limba strin reprezint deseori instrumentul lingvistic devenit
chiar surs de concepte i noiuni n anumite domenii aa cum este cazul limbii engleze pentru
domeniul economico-financiar, o bun stpnire a ei ofer viitorilor specialiti avantajul sporit al
capacitii de documentare i specializare nemijlocit, de operare cu informaii i concepte nsuite la
disciplinele economice de specialitate.
n condiiile actuale ale globalizrii economiei mondiale, limbajul economic a cptat o
pondere covritoare n ansamblul limbajelor de specialitate. Pentru viitorii specialiti din sectorul
financiar-contabil, nsuirea terminologiei de specialitate precum i a principalelor tipuri de
coresponden comercial n limba englez a devenit o necesitate incontestabil. Dei sunt mai puin
accesibili celor neiniiai, termenii economici au o frecven mare att n pres ct i n comunicarea
obinuit. Ca urmare, demersul educaional actual este menit s stimuleze formarea abilitilor de
achiziionare i utilizare corect a limbajului specializat n raporturile de comunicare profesional, s
faciliteze transferul de cunotine specifice specializrii inclusiv prin intermediul limbii strine.
Cunoaterea limbajului de specialitate n limba englez reprezint un avantaj la angajare.
Introducerea de ctre angajatorii strini n formalitile de candidatur pentru ocuparea unui post, a
testului de limb strin i n anumite situaii a interviului cu partenerul strin al firmei respective, se
constituie n comand socio-economic concret, factor puternic motivant pentru nvarea limbii
engleze n perioada de formare. Aadar studenii trebuie s-i formeze abiliti practice, stabile pentru
a nelege textele cu coninut financiar-contabil, a traduce astfel de materiale i totodat a conversa pe
baza unor teme profesionale care reclam un lexic specializat.
Cursul se adreseaz studenilor din anul I care au cunotine prealabile de limba englez.
Accentul este pus pe coninut dar i pe aspectele sociale i pragmatice ale comunicrii n limba
englez ntruct atenia studenilor trebuie ndreptat preponderent spre folosirea noilor cunotine n
situaii concrete de comunicare profesional.

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Obiectivele cursului
Fixarea i mbogirea cunotinelor de limb strin dobndite n ciclul preuniversitar i
aplicarea acestora la situaiile specifice domeniului financiar-contabil i bancar;
Iniierea studenilor n specificitatea limbajului din domeniul de profil i formarea competenei
generale de comunicare profesional n limba englez;
Dobndirea competenelor socio-lingvistice i pragmatice necesare receptrii i producerii
diferitelor tipuri de discursuri i texte de specialitate n situaii profesionale date;
Identificarea acelor evenimente de comunicare care se regsesc cel mai frecvent n mediul de
afaceri;
Contientizarea rolului limbii strine n creativitatea profesional, rolul acesteia n integrarea i
competitivitatea socio-profesional i n facilitarea accesului la trepte ierarhic superioare n
plan profesional;
Sprijinirea cursanilor n a putea maximiza propriul repertoriu strategic de nvare i utilizare
efectiv a limbii engleze i dup ncheierea perioadei de formare profesional.

Competene conferite

Dup parcurgerea disciplinei studenii vor fi capabili:

s foloseasc structurile discursului profesional;
s cunoasc terminologia de baz, specific domeniului financiar-contabil i bancar;
s poat face o prezentare de servicii / produse/strategii, s descrie unele schimbri / tendine,
convorbiri telefonice, negocieri, socializri exprimndu-i acordul, dezacordul, fcnd
recomandri, comparaii, sau explicnd cauza si efectul;
s poat nelege i redacta n limba englez principalele documente financiar-contabile de
sintez / rapoarte;
s redacteze corect n limba englez un CV, o cerere i un formular de angajare, o not
intern, etc.;
s elaboreze rezumatul unui text din domeniul economic sau financiar-bancar;
s poat identifica i explica formele gramaticale utilizate cu precadere n discursul economic
i financiar;
s dobndeasc ncredere n sine n exprimarea personal.

Resurse i mijloace de lucru

Cursul dispune de un manual de referin, destinat studiului individual al studenilor, precum

i de materiale didactice (sinteze tematice, teste de autoevaluare, aplicaii practice, subiecte i
ntrebri tip gril etc.) afiate pe site-ul facultii i platforma e-learning blackboard pentru nvarea
continu i evaluarea pe parcurs.
Parcurgerea unitilor de nvare nu impune existena unor mijloace sau echipamente
speciale de lucru, predominant este studiul individual, combinat cu activitile tutoriale. Acestea se
pot desfura dup un plan tematic, n sala de curs (conform programului afiat pe site-ul facultii),
n cadrul unor emisiuni televizate sau prin dialog online n timpul e-consultaiilor, conform
programului fiecrui tutore.
n timpul convocrilor, n prezentarea cursului sunt folosite metode interactive i
participative de antrenare a studenilor pentru conceptualizarea i vizualizarea practic a noiunilor
predate. Printre metodele didactice folosite cu success de autorul prezentului curs menionm:
integrarea n procesul de predare-nvare a sarcinilor de lucru bazate pe problematica
specializrii de baz a studenilor. Aceasta include practic o serie de abordri pedagogice n
care coninutul non-lingvistic este utilizat pentru a preda elemente de limb;
scurte prezentri pe teme de interes profesional;
audierea unor texte cu restructurarea sau reformularea lor ulterioar. Modificarea lexico-
gramatical a unui text audiat;

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 redactarea unor texte economico-financiare explicative prin transferarea informaiilor dintr-o
schem, hart, diagram sau tabel; (sursa fiind chiar unele manuale de tiine economice).
selectarea i organizarea optimizat tematico-terminologic a unor categorii semantice
specifice domeniului financiar i reflectarea acestora n activiti de nvare orientate spre o
mai bun nsuire a limbajului specializat.

Practici comunicative:

Obtaining general information: effective telephoning in a business environment, general

Requesting & presenting
financial information:
Collecting outstanding payments:
Resolving billing disputes:
Handling complaints:
Resolving banking problems:
Analyzing company performance:
Making presentations:
requests, making /rescheduling/cancelling an appointment;
discussing financial statements;
negotiating payment terms, collecting a late or missed
payment, reminding about a debt, correcting an error;
requesting an adjusted bill, disputing a charge, explaining
what steps youve taken, promising to issue credit;
making a complaint, receiving a complaint, demanding action,
minimizing the fault, offering solutions, apology for billing
error/missing documentation;
making a stop-payment, insisting that the bank corrects an
error;
analysing figures - costs and costing, describing changes in a
companys finances;
speaking about company products, quality, R&D, customer
relations.

Metodologia abordat i oblig practic pe participani la implicarea direct prin angajarea

acestora n producerea unor mesaje autentice n exprimarea unor idei, cunotine, atitudini i nu prin
producerea unor simple structuri lingvistice golite de sens. Aceast abordare reclam implicarea
atitudinal, cognitiv, profesional a tuturor cursanilor care interacioneaz simultan att cu
formatorul ct i ntre ei.
Dac n cazul limbii engleze generale orientarea de baz este cu precdere una literar i
filologic, n cazul limbii engleze pentru scopuri profesionale, finalitatea procesului instructiv-
educativ reclam o abordare interdisciplinar, profesorul extinde i adncete conexiunile dintre
disciplina de baz i limba strin, favoriznd transferul de cunotine. Sunt utilizate aadar
metodologii i activiti specifice disciplinei pe care limba strin o deservete.

Structura cursului

Cursul este structurat n 9 uniti de nvare

Unitatea de nvare 1. Applying for a Job

Unitatea de nvare 2.
Unitatea de nvare 3.
Unitatea de nvare 4.
Unitatea de nvare 5.
Unitatea de nvare 6.
Unitatea de nvare 7.
An Overview of Basic Economic Concepts
Types of Business Organization
The Main Branches of Accounting
Money and Banking: Personal finance
The Language of Accounting: Reporting financial
information
Financial Management: Sources of Funds

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 Unitatea de nvare 8. Financial Markets
Unitatea de nvare 9. International Trade: Main Documents for Shipping and
Payment
Coninutul lingvistic: If clause - First, second and third conditional, Non-finite forms: Infinitives and
gerunds, Mood: the Subjunctive vs. Indicative, Reported speech, Sequence of tenses, The passive
voice, Phrasal verbs, Word partnerships (Business English collocations).

Unit structure: most of the units contain an informative reading passage designed to give an
overview of a particular topic followed by a variety of comprehension, vocabulary, writing and
grammar exercises as well as discussion activities. Exercise types include open-ended questions,
true/false statements, multiple-choice, matching, sentence completion, and summarizing. The units are
grouped according to subject matter: Recruitment, Types of business organisation, Financial
accounting, Management accounting, Financial management-sources of funds, Banking, International
Trade and Financial Market. As well as introducing crucial accounting and finance concepts the
reading passages have a high density of relevant technical vocabulary. Moreover, the Vocabulary
development section is meant to help students increase and practice their business vocabulary in
context. The Grammar section highlights language functions and structures which are particularly
useful in business situations. Together, the texts, vocabulary and grammar exercises build up to a fair
collection of business terms mainly in the area of finance and accounting. The different groups of
units are not graded in terms of difficulty, and so need not necessarily be followed in the printed
order. Emphasis is placed on learner independence and students are encouraged to work out rules for
themselves.

Teme de control (TC)

Seminarele se vor desfura n felul urmtor: n prima parte a seminarului vor fi prezentri i
dezbateri interactive pe unitatea de nvare programat, n partea a doua, se vor face aplicaii
practice, studii de caz, simulri de teste etc. Sunt propuse teme pentru referate, plasate dup anumite
uniti de nvare (U4, respectiv U5), din care studenii i vor alege un subiect i vor ntocmi un
referat, conform indicaiilor profesorului (e-mail, posta, pn la o dat prestabilit). Referatul
reprezint 50% din evaluarea pe parcurs.
Studenii trebuie s rezolve toate temele de control i s rspund la ntrebrile tip gril incluse n
manual. Acestea au fost formulate astfel nct s faciliteze nelegerea materiei i s ndemne la
aplicaii.

Bibliografie obligatorie:

Essential English for Business and Finance Students, Andrei Niculescu, Editura Universitar
Bucureti, 2014, ISBN 978-606-28-0034-52013
The Language of Business: accounting banking finance, Andrei Niculescu (coordonator), Sanda
Marcoci, Cristina Crian, Vlad Clin,
Bucureti: Editura Fundaiei Romnia de Mine (2007)

Bibliografie facultativ:

Dicionar de termeni economici (romn-englez-francez-spaniol), Vasilescu, Dumbrvescu,

Burcea, Niculescu, Iai, Editura Polirom, 2008.
English for business purposes, Ciuciuc O., Tnsescu, E., editura Teora, 1998.
A Review of Essentials of Accounting, Anthony R.N, Prentice Hall, 1997.
Go ahead, Stefan R, Pricope M., Beldea E., - Editura Fundaiei Romnia de Mine, 2005.

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 Unit 1

Applying for a Job

Sources of job information

newspaper advertisements: the classified section of newspapers is a major source of job

openings. Two kinds of classified advertisements are listed in newspapers: signed and blind. A
signed advertisement includes the name of the firm placing the advertisement. A blind
advertisement does not show the firms name. In many cases only a telephone number or a
post office box number is given in a blind advertisement. Private employment agencies must
place signed advertisements;
employment agencies;
placement offices and instructors: most schools and colleges have placement counsellors that
aid students in career planning;
friends and relatives (networking).

The job application process

When a company needs to employ new people, it may decide to advertise the job or position in a
newspaper. People who are interested can then apply for the job by sending in a letter of application
or covering letter (US cover letter) and a curriculum vitae or CV (US rsum) containing details of
their education and experience. In some cases a company may prefer to do this initial selection after
asking candidates to complete a standard application form. The companys human resources
department will then select the applications that it considers the most suitable and prepare a shortlist
of candidates or applicants who are invited to attend an interview.

How to write a Letter of Application and a CV?

A letter of application should be concise and to the point. It should contain three or four
paragraphs.
First paragraph
o state your interest and purpose for writing the letter.
o if you know of a specific job opening, state that you are applying for it and how you
learned about it.
Your goal in this opening paragraph is to make a clear statement about your purpose in
contacting the employer.
Second paragraph
o emphasize your qualifications. Highlight only those areas that will give you an advantage
over other applicants.
o state what experience you have and how useful you can be to the company.
o create interest in your abilities and state your desire to work for that particular firm.
o use terms that the employer uses in the advertisement or that are industry specific.
Third paragraph
o request an interview. Be clear as to when and where you can be reached. If you are
responding to an advertisement which asks for salary requirements, give a range instead
of a specific number. Tell them your CV is enclosed if you have not already referred to it.

The CV or rsum is a concise statement of your background, education, skills and experience.
The primary purpose of your rsum is to secure an interview. In writing your CV, remember that it is
one of the marketing tools that should help you get a job. You should present your qualifications in
the best light possible but dont inflate or lie. If you get caught, you definitely ruin your chances for

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landing a job. In addition to personal information such as your name, address and telephone number,
other information include:
your career objective
education
o list degree, institution, major & date (beginning with the highest degree and working
backwards)
office skills and abilities
work experience / work history
o title, employers name, dates (dates can go first if you wish; list your experience in reverse
chronological order);
o achievements and accomplishments (if relevant to your objective);
o references - these should be listed on a separate sheet; they do not belong in the CV and
should not be submitted until the employer requests them. Be sure all references know you
and will speak of you positively. Ask their permission in advance. Include each
references name, job title and/or work relationship to you, organization, address, phone
number, e-mail address, and any other relevant contact information.

When applying for a position with a foreign company you should add your proficiency in
foreign languages. The following are some examples of ways to truthfully describe your level
of expertise.
o fluent
o proficient
o working knowledge
o conversational
o rudimentary knowledge

The interview

If you have done well thus far in the application process, you may get the opportunity youve
been hoping for the chance to meet the employer face-to-face. Helpful hints:
dress appropriately
give a firm handshake
maintain good eye contact
try not to act nervous, display good humour
show a genuine interest in what the interviewer says and be alert to all questions
try to understand your prospective employers needs and show how you can fill them
express yourself clearly and with a well-modulated voice.
From your application, your CV, and your employment tests that may have been administered, an
interviewer can determine your specific skills. What must be determined, however, is your ability to
project yourself through your use of good grammar, your knowledge of current events, your interests
and your attitude toward people and work in general.

Commonly asked questions:

regarding experience
o Why did you leave your previous job(s)?
o Which duties performed in the past have you liked the best ? the least? Why?
o Have you had any problems with previous supervisors regarding education?
o Which courses did you like the best? the least? Why?
o Did your grades adequately reflect your full capability?
o What special training have you had that is required for this position?
o Do you handle pressure well?
questions you may need to ask:
o What are the key responsibilities of the position?
o Is this a new position?
o What factors determine promotion eligibility?

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 o Has the organisation had any layoffs or cutbacks in the last five years?
o Is there anything unusually demanding about the job I should know about?
Preparing for an interview takes quite a bit of work. If you believe in your ability to be a good
employee, prove it in the interview.

The follow-up
After you have completed the interview, you should evaluate your performance and assess the
image you portrayed. Within the next day or two, it is appropriate to send a short letter or an e-mail to
the interviewer expressing your appreciation for the interview. A follow-up lets the interviewer know
you are still interested in the position and may give you another opportunity to emphasize your
qualifications. After following up with a thank-you letter, it still may be necessary in a week or two to
call the interviewer to politely inquire about the status of his or her decision. Do not just sit back and
wait for a prospective employer to call you go after the job ! However, do not continually ask the
employer about the status of the decision. Be patient for their response.

Romanian Equivalents of some qualifications

Licen n arte = BA (Bachelor of Arts)

Licen n tiine = BSc (Bachelor of Science)
Licen n administrarea afacerilor = BBA (Bachelor of Business Administration)
Licen n tiine economice = BEcon (Bachelor of Economics)
Diplom de absolvire a unui colegiu (2 ani) = 2-year university diploma / degree
Diplom de studii aprofundate = MA ( Master of Arts) / MSc ( Master of Science)
Master n administrarea afacerilor = MBA ( Master of Business Administration)
Doctorat = PhD (Doctor of Philosophy)
Doctorat n medicin = MD (Doctor of Medicine) (MD, from the Latin Medicin Doctor
meaning "Teacher of Medicine")

Section B
Fundamentals of Business Writing

Business relies heavily on written communications. Business letters are different from personal
correspondence in that an acceptable format must be followed. In order to prepare effective business
letters (including job application letters) you should become familiar with the parts and styles of a
business letter.

Letter styles and parts

Common parts of a standard business letter include:

Letter head or typed heading (return address)
o includes name, full mailing address, telephone number of the sender and may contain a
description of the business, trade-mark, fax number etc.
Dateline (date of writing)
o to avoid any confusion it is best to put the date in word rather than number form. The
number of the date is pronounced as an ordinal figure, though the endings st, nd, rd, th,
are often omitted in writing the date.
(UK style: day-month-year: 25 February, 2013 /
25th February, 2013
American style: month-day-year : February 25, 2013
Inside address (the recipient address)
o The mailing address of the firm or person to whom the letter is being sent is placed below
the date (space down 4 lines)
Salutation (greeting)
o if you do not know the recipient:
Dear Sir or Madam/ Dear Sirs

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 (AmE) Gentlemen / Ladies and Gentlemen
o if you know the recipient:
Dear Mr/Mrs/Miss/Ms/Dr/Professor Johnson
Subject line (optional)
o if you put a subject line it should be in UPPERCASE, directly below the salutation
(alternatively can be located directly after the "inside address, before the "salutation."
Normally the subject sentence is preceded with the word Subject: or Re:
The body paragraphs:
o 1. introductory 2. main 3. concluding
Complimentary close (space down 2 lines below the last line of text)
o If you do not know the recipient and your salutation is Dear Sir or Madam then your
complimentary close should be: Yours faithfully, (AmE) Yours truly, Yours very
truly
o If you know the recipient and your salutation is Dear Mr/Mrs. Name then your
complimentary close should be: Yours sincerely(AmE) Sincerely yours, Cordially
yours
o If you are already acquainted with the recipient and your greeting was for instance Dear
Tom it may be appropriate to use a phrase such as Kind regards, Best regards, or
With warmest regards.
(Note: the second word of the closing is NOT capitalized)
o Signature block (4 or 5 lines beneath the complimentary closing
it contains the handwritten signature of the writer, the full typed name of the writer,
and the title of the writer. The company name is optional. The blank lines between the
closing line and the writers name allow room for the hand signature.
o Enclosures
(2 single spaces after the title of the writer type: Enc. or Encs if more than one
document/paper is to be enclosed with the letter.
Punctuation

Full punctuation: as its name implies, means that all punctuation marks are shown. There are
commas after the salutation (Dear Mrs. Hanson,) and after the complimentary close (Yours
sincerely, or Yours faithfully,). In the United States a colon is often preferred after the
salutation (Dear Dr. Smith :).
Open punctuation: means that punctuation marks are kept to a minimum. There are no
punctuation marks in the inside address, no commas after the salutation or complimentary
close and no full stops between the letters of abbreviation.

Letter styles

Some offices have one established letter style. Some leave style decisions to the author. You should
know the standard letter styles and how to arrange each correctly.
Block format
(Full) Block format/style
o is the most used letter style in business offices nowadays. In this format all the letter parts
are aligned to the left margin and paragraphs are not indented; new paragraphs are created
by leaving a blank line.
Modified block format/style
o means that some letter parts (the return address, the dateline, closing and signature) are
shifted over to the right. They usually start just to the right of the center of the page. All of
the other letter parts are aligned on the left margin. Body paragraphs begin at the left
margin.
o When body paragraphs are indented (four or more spaces), then this style is known as the
Semi-block style or Modified block with indented paragraphs. In this latter case it is
recommended (but not required) that no line spacing should be left between paragraphs.

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VOCABULARY DEVELOPMENT

salary : We use this word for monthly payments to professional employees.

wage(s): money paid weekly to manual or unskilled workers (paid according to the number
of hours, days, or weeks that an employee works).
fringe benefits (also known as perks):
represent extra payments made in kind, e.g. a company car, free accommodation,
free meals, free life/dental insurance, free refreshments, etc.
salary + perks = remuneration package

COMMON WORD COMBINATIONS (COLLOCATIONS)

work (noun)
Verb + work : do, carry out, find, give up, complete
Adjectives + work: full-time, part- time, extra, hard, hard days, skilled, voluntary, casual, sloppy
Noun+of+ work: backlog of ~, rewards of ~, search of ~.

job (noun)
Verb + job : apply for, do, get, loose, quit, keep, fall down on
Adjectives + job: good, full-time, part-time, temporary, odd, cushy, demanding
Job + noun: advertisement, search, interview, description, vacancy

Make sentences of your own to practice the word combinations above.

Also note the following expressions with WORK:

Her work is unsatisfactory / sloppy;
If you are in work, you have a job;
My wife has been out of work for 3 years;
When I first arrived in Bucharest I had a part-time/full-time/casual/freelance work;
If you have too much work, you are up to your ears in work.
Note the proverb: Many hands make light work!

Concepte i termeni de reinut

Curriculum Vitae (U.S. rsum), the letter of application, newspaper advertisements, employment
agencies, employment application, academic degrees, job descriptions, wages, fringe benefits,
holiday and sick pay, letter styles: full block style, semi-block style and modified block style, main
parts of a business letter, helpful hints at an interview.

ntrebri de control i teme de dezbatere

List sources that can be used to obtain job information.

What is the perfect job for you? Give arguments for your choice.

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 Unit 2

An Overvie w o f Basic Econo mic Con cepts

Economic sectors
All the productive activities of people, aimed at satisfying needs and wants, can be classified into
the following three sectors:
Primary sector: involves the extraction and production of raw materials, such as coal, oil, wood,
steel, etc. A coal miner, a farm worker and a fisherman would be workers in the primary sector.
Secondary sector: involves the transformation of raw materials into useful goods. A home builder, a
car manufacturing worker, an electrician or a dressmaker would be workers in the secondary sector.
Tertiary sector: involves the provision of services to consumers and businesses, such as transport
services, wholesalers, cinema and banking. A shopkeeper and an auditor would be workers in the
tertiary sector.

Supply and Demand

It is the backbone of a market economy. Demand refers to how much (quantity) of a product or
service is desired by buyers. The quantity demanded is the amount of a product people are willing to
buy at a certain price; Supply represents how much the market can offer. The quantity supplied refers
to the amount of a certain good producers are willing to supply when receiving a certain price. Price,
therefore, is a reflection of supply and demand. An increase in the average level of prices in an
economy is referred to as inflation.

The Business / Economic Cycle

Any economy goes through alternating intervals of growth and decline. This is known as the
business / economic or trade cycle. The business cycle is characterised by four main phases:
Boom: high levels of consumer spending, business confidence, profits and investment. Prices
and costs also tend to rise faster. Unemployment tends to be low as growth in the economy
creates new jobs
Recession: falling levels of consumer spending and confidence mean lower profits for
businesses which start to cut back on investment. Spare capacity increases, rising
unemployment as businesses cut back and reduce stocks
Slump / depression: a prolonged period of declining GDP - very weak consumer spending
and business investment; many business failures; rapidly rising unemployment; prices may
start falling (deflation)
Recovery: things start to get better; consumers begin to increase spending; businesses feel a
little more confident and start to invest again and build stocks; but it takes time for
unemployment to stop growing.

US President Harry S. Truman: The definition of a recession is when your neighbour loses his
job - a depression is when you lose yours.
Sir Isaac Newton (talking about gravity): What goes up must come down.
Almost all companies are affected by the stage of the business cycle, but some of them may be
more vulnerable to changes in the business cycle than others. Examples of market-affected businesses
include: the home appliance sector, fashion retailers, house-builders, restaurants, advertising,
overseas tour operators, construction and other infrastructure firms.

Domestic and National Product (GDP & GNP)

GDP or gross domestic product: the market value of the goods and services produced by labour
and property located in a country.

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 GNP or gross national product: the market value of the goods and services produced by labour and
property of residents of a country (including income of those located abroad).

Balance of payments (BOP):

The discrepancy between the amount of money paid for imports and the amount of money
received for exports. Excesses of payments or receipts in particular kinds of transactions are called
deficits or surpluses.

Labour market and unemployment

The labour market is where businesses hire workers. A business needs people to help the day to
day running of the operation. The amount of labour needed depends on whether the business is a
labour intensive or capital intensive. A business that needs more people and less machinery is known
a labour-intensive business. Hairdressing, house building, teaching and the fashion industry are
examples of labour intensive industries. A capital-intensive industry is where a business relies heavily
on machinery and technology in its transformation of inputs into outputs. Good examples include
the car industry, steel production and the road/rail construction.
Unemployment is where there are people who are willing and able to work but cannot find
employment at the going wage rate. For example a machine worker who cannot get a job because
there are no jobs for machine workers in the area. High unemployment, though it can be bad for local
sales, can provide a business with a good source of cheap labour.

Classification of products / goods

Product classification can be done on a variety of perspectives. Products can broadly be

classified on the basis of (1) tangibility (2) durability and (3) use. So from the point of view of
tangibility, products can be tangible (a printed book, a chair, a table etc...) or intangible (music,
software, picture downloaded from the Internet). From the point of view of their durability, goods can
be classified as:
- Durable goods / durables:
o Brown goods: (the term stands as the colloquial slang for the electronic consumer
products) examples: radio, CD player, computer, mobile phones etc.)
o White goods : (ex. Heavy/large household appliances)
- Non-durable goods / nondurables:
o Fast Moving Consumer Goods (FMCG): bread, cigarettes, milk, newspapers, soap, etc.
FMCG may be further subdivided into 3 Classes:
Staples: goods purchased on a regular basis. Eg. Soap, Toothpaste, etc. Whenever the
stock is about to end the consumer buys these products again.
Impulse Goods: goods which are purchased without planning or search. Our external
stimuli provoke us to buy these products. Eg. Cold drinks, Chocolates, Chips etc.
Emergency Goods: These goods are purchased when the need arises. Eg. Umbrellas in
rainy season, pullovers in winters etc.. The marketers tries for a very good distribution
chain, as the sales is not the same throughout and whenever the need arises, the product
should be available at maximum places.

From the point of view of their use, products can be classified as :

- industrial goods: meant for non personal and commercial use. They may generally include:
o raw materials
o equipment/machinery
o operating supplies ( stationery, lubricants etc.)
- consumer goods

11
Section B
Memo writing

A memo is a document typically used for communication within a company or between company
subsidiaries.

Purpose of a memo
To inform readers of specific information. Sometimes one may also write a memo to persuade
others to take action or give feedback on an issue. However, most memos communicate basic
information, such as meeting times or due dates. The typical audience for a memo is your co-workers
and colleagues. However, you might also write memos to employees from other companies working
on the same project or other departments within your company/ office building

General Format
Memos never use indented paragraphs. All lines of the memo begin at the left margin. The
salutation and complimentary close are omitted. The following entries: to, from, subject and
date are to be found. This information may be bolded or highlighted in some way. In practice,
memos don't include a signature line. However, you may sign with your initials only.
Memo Sections
Memorandums generally consist of a heading section, an opening paragraph / section, the body
section, and a closing paragraph / section.
The first paragraph or section of any memo always states the purpose of the memo. It should be
quite brief. The subsequent content depends on the type of memo being written
In the body section of the memo, include any information the reader might need to know. The most
important (and most specific) information should come first, followed by less important (and more
general) information.
In the closing paragraph or section, indicate your recommendations, the action you want the reader
to take, or (if no particular action is necessary) end the memo on a positive note.

The memo header (heading section) looks like the following example:

MEMO

TO: (recipients' names and job titles)

FROM: (your name and job title)
DATE: (current date)
SUBJECT: (purpose of the memo)
========================
Text of the memo

Concepte i termeni de reinut: free market, supply and demand, domestic/mixed/sustainable

economy, business cycle, boom, going into recession, slump, GDP & GNP, labour market,
labour intensive job, unemployment, balance of payments, retailer, durable goods, staples,
capital goods, fast moving consumer goods, memo.

ntrebri de control i teme de dezbatere

Why do businesses produce goods and services?

What is Economy?
What is Economics?
What are the basic causes of inflation?
Write a memo. Assume the following scenario:
Your job title is: Property manager assistant with Romanian Building Management
(RBM); Subject: Gas shut-off. To: All tenants at ABC Plaza

12
 Unit 3

For ms of business organization

The general terms for the organizations that sell goods and services are: business, enterprise,
company, firm, and (U.S.) corporation with the abbreviation "Corp.".

For- profit and not-for-profit organizations (NPOS)

The key difference between these two organizations is the distribution of profits. While for-profit
organisations are free to realize a profit and pass it out to shareholders, not-for-profit organisations
may not distribute their profits-called surpluses-to their members - profits must be held and/or
invested back into the organisation. This form of organization does not pay income and property
taxes, but it also cannot use its funds for anything other than the public purpose for which it was
formed. In the case of for-profit organizations the profits which are not re-invested in the organization
can be distributed to their shareholders /owners, or anyone else they would like. Another difference,
which may explain the first, is ownership of the business. An NPO has no owners whatsoever, only
stakeholders. A stakeholder is not an owner, but rather someone who has a stake in the successful
operation of the organization. Stakeholders can be members of the non-profit or even beneficiaries of
the non-profits activities. Therefore with a non-profit, individuals who created the business do not
receive any legal ownership in the business and, further, have no guarantee that they will be able to
retain control of the organization once formed. Also, a non-profit business cannot be sold. If a non-
profit organization were to close down, or dissolve, the board of directors of the non-profit must
distribute all of the non-profits assets to another non-profit organization after all debts have been
settled. Examples of non profit organizations are: Trade associations, social clubs, universities,
charities, foundations, churches etc. The terms used in most jurisdictions include society, not-for-
profit, non-profit, association.

For profit organizations

For profit organizations may come in every shape and size according to the type of ownership
and/or liability. The latter term is a key criterion in classifying private businesses. On the one hand
there are unlimited liability businesses; on the other hand there are limited liability companies. As
you plan starting up your own business, one of the first decisions you need to make is the formal
business structure you will assume. Which business entity you choose depends on the needs of your
business, growth goals, and how many people you plan to involve in your company. Profit is the goal
and your business will pay taxes on that profit.
Sole proprietorship
Sole proprietorship also known as a sole trader describes any business that is owned and
controlled by one person. Being a sole trader is the simplest way to run a business. One is basically
self-employed. Individuals who provide a specialist service such as plumbers, hairdressers
/hairstylists, translators or photographers are often sole traders. They do not have a separate legal
existence from their businesses. In the eyes of the law, the business and the owner are the same. As a
result, the owner is personally liable for the firm's debts and may have to pay for losses made by the
business out of his own pocket. This is called unlimited liability.
Partnership
Partnerships are businesses owned by two or more people. Like a sole trader, partners have
unlimited liability. This means that one partner is personally liable not only for his own actions but
also for another partner's actions/misconduct. For example, if your partner takes on a business loan,
you are also responsible in seeing that it is paid back. Typical examples of business partnerships
would be: a dental office, a law firm, an accounting / auditing firm or an engineering consulting
office. One advantage of partnership is that there is someone to consult on business decisions. The
main disadvantage of a partnership comes from shared responsibility. Disputes can arise over

13
decisions that have to be made, or about the effort one partner is putting into the firm compared with
another.
Limited companies
A limited company has special status in the eyes of the law. These types of company are
incorporated, which means they have their own legal identity and can sue or own assets in their own
right. Their owners are not personally liable for the firm debts. The ownership of a limited company
is divided up into equal parts called shares. Whoever owns one or more of these is called a
shareholder. Because limited companies have their own legal identity, their owners are not personally
liable for the firm's debts. The shareholders have limited liability, which is the major advantage of this
type of business legal structure. There are two main types of limited company: private limited
company (ltd) and public limited company (plc).
Private limited company (Ltd.)
This is the most commonly used business structure. A private limited company abbreviated as
limited or Ltd. is often a business owned by a small number of private individuals such as an
independent retailer in a shopping centre. Shares do not trade on the stock exchange.
Public limited company ( Plc).
A public limited company, abbreviated as Plc, (US listed company) is similar to a private
limited company in that profits are distributed to shareholders and the liability of members is
restricted to their shareholdings. The owners of a public limited company can obtain their share
capital from members of the public. In other words it is a publicly traded company. They can also sell
the shares on the Stock market while a private limited company cannot.
Unlike a sole trader or a partnership, the owners of this form of business are not involved in the
running of the business unless they have been elected in the Board of Directors. A Plc. is usually a
large, well-known business. This could be a manufacturer or a chain of retailers with world-wide
branches. Examples would be: The General Electric Company, Tesco, British Airways, Microsoft, etc.
Their shares are usually traded on the Stock Exchange.
Joint venture
A joint venture is an association of two or more entities combining property and expertise to carry
out a single/specific task / business enterprise for profit. The entities can be corporate, governmental,
or individual. Although very similar to a partnership, a joint venture is generally more limited in
scope and duration. When joint ventures become large they may restrict competition.
Franchising
Franchising allows one business to operate under the trading name of another business, usually an
established brand, and sell its products and/or services for a specified period and in a specific
geographical area. A franchise is basically a joint venture between a franchisee, (the company/person
who buys the right from a franchisor to copy a business format) and a franchisor, (the
company/person who sells the right to use a business idea in a particular location. Many well-known
chains of fast food restaurants, hotels, fuelling/filling/ (U.S.) gas stations, are franchises e.g.
McDonalds, Dominos Pizza, Fornetti, Shell, Holiday Inn, etc. Opening a franchise is usually less
risky than setting up as an independent retailer. The franchisee is adopting a proven business model
and selling a well-known product in a new local branch. However, the franchise is costly. Royalties,
commissions & other payments are due to franchisor.

Setting up a business

Different countries have different procedures involved in setting up a new business. In most
cases, in order to set up a business- let us say for example a PLC- you need to produce and submit two
key documents to the Companies House or Registrar of companies. These are the Memorandum of
Association and the Articles of association.
Memorandum of Association contains the name and address of the company, a statement of
business purpose and a statement of the total number of shares authorized to be issued. The second
important document, the Articles of association contain details of running the company, internal
management affairs and liability. The articles deal with such things as the powers of directors,
members' rights, procedure for paying dividends, winding up etc. Once the two documents have been

14
submitted and approved, the Registrar issues a Trading Certificate provided that the minimum
capital requirement has been met at start-up ( in UK at least 50,000) .

Company organisational chart

A typical business organizational chart looks like this:
At the top there are members of the Board of Directors who choose a Chairman (UK)/ President
(US). The board represents the interests of the shareholders. The company is managed by the
Managing Director (UK) / Chief Executive Officer (U.S.). Other senior managers might include
Sales, Finance, Human Resources Senior Executives or Officers who report to the MD. Under the
Directors is often a person with deputy in his job title.
At lower levels we have sales assistants for instance who report to Sales Director.

British and American terms

BRITISH AMERICAN ROMANIAN EQUIVALENT

annual general meeting (AGM) / annual stockholders meeting adunarea general a acionarilor
annual shareholders meeting (AGA)
articles of association bylaws statut
authorized share capital authorized capital stock capital social subscris
company corporation companie
memorandum of association certificate / articles of actul de constituire al unei
incorporation societi
ordinary shares common stock aciuni simple
public limited company publicly traded/ listed societate pe aciuni (SA).
company
share stock aciune
shareholder stockholder acionar
trade union labor union sindicat

Section B-Grammar review

Reporting what people say: Reported Speech

Reporting statements
When we want to report/present what another person said, wrote or believed in the past we use
indirect or reported speech. Both the reporting verb and the verb in the reported speech are therefore
usually in the past tense.
We use reporting verbs such as 'say', 'tell',state, 'ask', and we may use the word 'that' to
introduce the reported words. When converting direct speech to indirect/reported speech several
grammatical changes at various levels- are involved.

Tense changes
When the reporting verb is in the past tense, the tense in the reported statement often moves
one tense back in the past; it is what the grammarians call backshift.
Direct speech Indirect speech
Present simple Past simple
Present continuous Past continuous
Present perfect simple Past perfect simple
Simple Future Future in the past
Example:
Direct Speech: When we last met, John said I work for PricewaterhouseCoopers (PwC)
Indirect Speech: When we last met, John said that he worked for PricewaterhouseCoopers
(PwC).
However tenses are not always changed mechanically when speech is reported. The verb forms
remain the same in the following cases:

15
 o If the reporting verb is in the present tense:
John: "I will never go to Afghanistan" >>> John says he will never go to Afghanistan.
o When we report something that is still true at the moment of speaking:
Tom: "Russia is the largest country in the world." >>> Tom said Russia is the largest
country in the world.
o When a sentence is made and reported at the same time and the fact is still true:
Michael: "I am stony broke." >>> Michael said he is stony broke. (informal)

Modal (auxiliaries) changes

Similarly to tense changes, if the reported sentence is still true at the time of reporting, no changes are
made. If, however, the reported sentence is out of date, some changes occur.
Example:
Direct Speech: He said: We must receive all Customs and Shipping documents.
Indirect Speech: He said that they had to receive all Customs and Shipping documents (the reported
sentence is no longer true at the time of reporting/speaking).

Time and place expression changes

The changes that may happen to the expressions of time and place are due to the changes in the
context (time and place). Always bear in mind the context when applying the following changes. (No
changes are made if the reporting takes place at the same time and/or in the same place as the original
utterance /direct speech).
DIRECT SPEECH INDIRECT SPEECH
today that day
now then
yesterday the day before
last night/week/year/ the previous night/week/year /
Monday etc. Monday etc.
tomorrow the next / following day
the day after tomorrow two days later
four days/weeks/years etc. ago four days/weeks/years etc. before
in four days time four days later
next week/semester...etc. the following week/semester etc.
this week/semester etc. that week/semester etc.
here there

Reporting questions
When we report questions, the word order changes from a question word order to a normal statement
word order (i.e. from verb-subject to subject verb sequence).
Example:
Direct speech: "Who do you work for?" Reported speech: She asked me who I worked for.
Direct speech: "What's the time?" Reported speech: He asked her what the time was.

Reporting commands/orders and requests

If someone orders, requests or advises someone else to do something, this can be reported by using a
to infinitive clause after a reporting verb such as: tell, ask, order, advise, urge, persuade.
Example:
Direct speech: Our CEO said : Dont pay the invoice!
Indirect speech: a) Our CEO told us not to pay the invoice.
b) Our CEO said that we shouldnt pay the invoice.

Concepte i termeni de reinut: limited liability company, public limited company, sole trader,
franchising, joint venture, memorandum of association, articles of association, trading certificate,
organisation chart, managing director/chief executive officer, deputy director, board of directors,
reported speech.

16
 Unit 4

The Main Bran ches of Ac counting

The Accounting Profession

Nowadays, obtaining, recording and classifying financial records (e.g. sales invoices, purchase
invoices, cheques received from debtors, duplicate receipts etc.) are the basic responsibilities of a
bookkeeper. An accountant uses the information produced by a bookkeeper to generate trial
balances and standard financial statements. He/she should also be able to provide specific reports on
revenues and expenses and other reports related to the financial standing of a company. The person
who checks to see if the information is true and fair is called an auditor.
Accountants are generally classified as private accountants or public accountants. Nowadays,
every company has some form of an internal accounting department and those employees would be
considered private accountants. Public accountants may be employed by a particular company just as
private accountants are, or they may be self-employed / independent certified public accountants
(CPAs) in US or chartered certified accountants in UK. Public accountants perform a broad range of
accounting, auditing, tax, and consulting activities for their clients, which may be corporations,
governments, non-profit organizations, or individuals. The largest public accounting firms are known
as: PricewaterhouseCoopers (PwC), KPMG, Ernst & Young, Deloitte & Touche.

Recording, analysing and presenting financial information

Accountant or bookkeeper records the financial information in a collection of accounts-known as

the ledger. The information is grouped together under headings such as: Cash book, Sales ledger,
Purchase ledger, General ledger etc. The listing of all of the accounts available for use in a
company's accounting system is known as the chart of accounts which can be found in the General
Ledger (each account is accompanied by a reference number). For instance revenue accounts (from 4
000 to 4 999). Basic types of accounts are:
assets
liabilities
owners equity / stockholders' equity
revenue/income
gains
expenses
losses

At the end of the financial period the accountant will analyse the information that was recorded
in the accounts. This is to see whether the business is making a good profit after tax, expenses,
deductions, interest and dividends or to determine problem areas and plan to solve the problems.
Various accounting ratios are used in the analysis.
The most popular accounting software programs used today follow the so called double-entry
bookkeeping practices e.g. a system of accounting in which every transaction has a corresponding
positive and negative entry (debits and credits). Therefore every business transaction affects at least
two accounts.
After analysing the financial information, the accountant will present it to interested people such
as the managers, potential investors, creditors, Inland Revenue etc. in the form of financial
statements. The main types are:
Balance sheet
Profit and Loss Account (US.) Income statement
Cash Flow Statement

17
Accounting standards

Because external financial statements are used by a variety of people in a variety of ways,
financial accounting has common rules known as accounting standards and as generally accepted
accounting principles (GAAP). This provides for consistency in the reporting process of companies
so that shareholders, banks, and specialized government authorities can have all reporting companies
preparing their financial statements using the same rules and reporting procedures. The main
accounting principles are the following:

GAAP

Romanian language equivalents

GAAP Romanian language equivalents

Going Concern Concept Principiul continuitii activitii
Materiality Concept Principiul pragului de semnificaie
Matching Concept Principiul corelarii/conectarii veniturilor cu
cheltuielile efectuate pentru realizarea lor
(Revenue) Realization Concept Principiul constatrii / recunoaterii veniturilor /
profiturile numai cnd acestea sunt efectiv realizate
Consistency Concept Principiul permanenei metodelor
Conservatism Concept / Prudence concept Principiul prudentei
Business Entity Concept Principiul entitii

FINANCIAL ACCOUNTING AND MANAGEMENT ACCOUNTING

Accounting is usually subdivided into two areas:

Financial accounting
Management accounting

Financial accounting provides financial information to people outside an organization or not

involved in the day-to-day running of the business. The main users of financial accounting reports/
statements some mentioned above- include: government, customers, suppliers of goods and
services, lenders of finance, trade unions / (US) labour unions, financial analysts, shareholders /
owners of a company.

Management / managerial accounting deals with activities inside the organization. (Most
companies call it finance or managerial finance / corporate finance). Therefore it seeks to provide
information to those in positions of authority within the organisation, i.e. top, middle and lower level
managers. Reports to management may be either summaries of past events, forecasts of the future, or
a combination of the two. Preparation of these data and reports is the focus of managerial accounting,
which consists mainly of the following functions: (1) budgetary planning, (2) cost and profit analysis,
and (3) performance evaluation and control.

Section B
Grammar review: Conditional sentences

IF CLAUSE
Conditional-type sentences express a hypothetical or contingent state of affairs. They have two halves
(clauses): a dependent one beginning with if (condition) and a main or independent one which might

18
be said to answer the if-clause (the possible outcome that follows). There are four main types of
conditional sentences:

I. Zero conditional: Stating a general rule (what generally happens when something else
happens).
Both verbs are in the present simple tense:
If you pay people peanuts you get monkeys
If you order in bulk you usually get a discount
II. First conditional: Speculating about the future (possible future events).
This type describes simple situations which may or may not take place in the future. The Present
Tense is used in the if-clause and the Future Simple is used in the main clause.
If I do an MBA Ill improve my job prospects.
If our main competitor goes bankrupt we will increase our market share.

III. The second conditional (for unlikely (unreal), imaginary situations in the present).
The verb in the if-clause is in the Past Tense; the verb in the main clause is in the conditional
tense (would, could, should or might plus a main verb in the base form, i.e. infinitive without to).
What would you do if you won a million dollars?
If I lost my job tomorrow I would move to the country side.
I wish I wasnt working next weekend.

IV. The third conditional: speculating about the past (unfulfilled past conditions or past-unreal
conditions).
This type describes situations in the past which are hypothetical or unreal. The verb in the
if-clause is in the Past Perfect Tense while the verb in the main clause is in the Perfect
Conditional.
If I had got up earlier, I would have caught the train?
They wouldnt have given me the job if the interview hadnt gone well.
I wish we had advertised on TV

Concepte i termeni de reinut: bookkeeping, certified public accountant (CPA), management

accounting, financial accounting, GAAP, general ledger, interest, dividends, chart of accounts,
double-entry bookkeeping, Inland Revenue, if clause.

ntrebri de control i teme de dezbatere

Management accounting has been described as the eyes and ears of management. What do
you think this expression means?
Accounting information should be understandable. As some managers have a poor knowledge
of accounting we should produce simplified financial reports to help them. - To what extent
do you agree with this view?
How has accounting changed in modern times?

19
 Unit 5

Mone y and Banking

The role of banks in modern society

When people refer to the term bank they may have in mind the various services provided by
this institution. The following are some of the most popular services:
loan granting
deposit accounts
current accounts(US) checking accounts
savings accounts
credit cards
Internet banking
mobile banking
Banks are known to give two assurances to the depositors:
Safety of deposit, and
Withdrawal of funds on demand.
Banks provide funds for business as well as personal needs of individuals. The leading role is clearly
financial intermediation - they move capital from idle people having surplus money into the hands of
the entrepreneurs/farmers/self-employed people etc. which leads to balanced economic development
in the country. Banks facilitate import-export transactions and also encourage savings habit amongst
people and thereby make funds available for productive use. They help in raising peoples living
standards in general by enabling households to purchase consumer durable goods, houses,
automobiles, etc.

Banking & personal finance

As an employee you may receive the money you have earned as weekly wages in cash (if you are
a blue collar worker), or as monthly salary in a current account (if you are a professional, a white
collar worker). In the latter case, the current account (U.S. checking account) is where you pay in
your earnings and from where you withdraw money to pay your everyday bills. If you hold a current
account you can withdraw your money with no restrictions, but youll receive little or no interest.
Each month, your bank (or credit union) will send you a bank statement either in the mail or by e-
mail if you prefer. The statement will list all of your transactions as well as any fees charged to your
account and interest your money has earned. If you need to make fixed monthly payments over long
periods such as mortgage or annual club membership, you can give an instruction to the bank to pay
them at stated times by a standing order. Another way of making regular payments is to authorize the
creditor to draw the money by direct debit. The account holder (payer) completes a direct debit
instruction and sends it to the payee. Large organisations such as telephone, Internet providers, cable
TV companies, can reduce their billing costs considerably. It becomes much cheaper administratively
than receiving payments by standing order. It is certainly much cheaper than sending each customer a
bill each month and waiting to receive payment. Another advantage is that the creditor can vary the
date of the direct debit, which can help its cash flow position, and also the amount to be debited where
this is subject to variation.

Your bank may also provide for you the opportunity to store valuable documents and other items
at the bank for added security. If you need such a service you should ask for a safe deposit box. Banks
offer boxes in various sizes and the rental fees are based on the size of the box. If you want to save up
money you have to open a savings account where you can deposit any extra money that you may
have and only take money out when you intend to spend it on something special such as a trip abroad

20
or a wedding reception. If you choose to invest your money in a deposit account (U.S. time deposit
account), you receive a high rate of interest but withdrawals prior to maturity may result in a penalty.

If you need to send money to a person in your own country, a safe, reliable way is to use a
domestic wire transfer. Your bank will also accept incoming wire transfers from any domestic bank
for credit to your deposit or loan account. If you want to transfer money to another country you will
probably choose to originate an international bank wire transfer in a foreign currency. Bank policy
requires a signed outgoing wire transfer form in order to originate a wire and of course there is a fee
for you to pay. A cheaper but slower way of sending money is for you to buy a bankers draft and
post it to the person or bank at the other end. A bankers draft is simply a cheque (U.S. check) issued
by a bank drawn on itself or on a corresponding bank in another country.

If, like many of us, you find that you need extra cash from time to time, you can apply for an
overdraft. This is actually an instant, no-questions-asked, no-paperwork loan, a type of revolving
loan where deposits (credits) are available for re-borrowing, and interest is charged on the daily
overdraft (debit) balance. An overdraft is approved only for a fixed period (usually one year) after
which it must be renegotiated and stipulates a maximum amount (called overdraft limit) against
which you, as a current (checking) account customer can write checks or make withdrawals.
Generally, people avoid having an overdraft because in the end they will pay a lot of interest. If your
account is overdrawn, however, you are in the red (as opposed to in the black or in credit). In some
shops it is possible not to pay outright, but on credit. If you want to return something which you have
bought to a shop, you may be given a refund (i.e. your money will be returned), provided that you
still have the receipt. With such durable goods as cars, refrigerators, washing machines or furniture
you may pay the full amount or you may pay in instalments(U.S. also installments).

If you want to buy your own house, which is a big investment and a financial commitment, you
may take a bank loan for which you must offer security or pledge. If your bank grants you this loan,
you have a mortgage. When you buy (or more formally purchase) in a shop, you may pay in cash, or
you may pay by cheque or by credit card.
Technological progress has made it possible to do banking transactions by telephone or from ones
personal computer, linked to the bank via a network, that is to do home banking.

How do banks earn profits?

Banks are generally owned by shareholders and, as any other for-profit-organisation, at the end of
the year, they pay some or all of their profits to their shareholders in the form of dividends. Banks
earn money by taking money from depositors, and then lending the money to other people and
businesses for a fee which is called interest. Interest received on loans and fees charged for services
which exceed the interest allowed on deposits are the main sources of income for banks from which
they meet their administrative expenses. Banks also earn interest on the securities they hold.
Moreover, they get a commission for various customer services, loan servicing, financial counselling,
selling the products of the insurance companies to their own customers etc.

Where do the banks get the money they loan out?

Banks may get money to make loans, by the following ways:
use their capital reserves
accept deposits from customers
borrow money from other banks
borrow money from the central bank

Types of banks

Banks differ slightly based on how they are organized and which regulatory agency monitors
them, although most people are not aware of the differences.

21
 Commercial banks also called retail banks are normal banks that provide the basic banking
services to their customers.
Merchant banks (investment banks) have nowadays a complex range of financial activities. This
type of bank specializes not in lending out its own funds, but in providing various financial services
such as accepting bills arising out of trade, underwriting new issues, and providing advice on
acquisitions, mergers, foreign exchange, portfolio management, etc. (Definition , 2011, Campbell R.
Harvey.- Hyper-textual Finance Glossary).
A central bank is a banker's bank. It is normally part of or connected to the government of a
country and manages the country's financial system. A commercial bank provides banking services to
businesses, institutions and some individuals. The money it takes in from its customers is deposited at
its local central bank. Nearly all the country's banks have accounts at the central bank to keep their
money and for borrowing to make up for any temporary shortages of cash. Nearly every country in
the world has a central bank.

Section B
Grammar review: The Subjunctive Mood in English

Structure
For all verbs except the past tense of be, the subjunctive is the same as the bare infinitive (infinitive
without "to"):

be (past) be (present) all other verbs

(past & present)
I were I be I work
you were you be you work
he, she, it were he, she, it be he, she, it work
we were we be we work
you were you be you work
they were they be they work

Use
Unlike the Indicative mood (the usual mood in declarative, interrogative and exclamatory
sentences) which gives you factual information, the subjective mood talks about possible, desirable or
imaginary situations. Therefore, the main difference between the indicative and the subjunctive mood
is the difference between objectivity and certainty which is implied by the indicative mood and the
possibility and subjectivity implied by the subjunctive mood.

It may also express:

A demand, requirement, request or suggestion.
The subjunctive is typically used after:

the verbs: ask, command, demand, insist, urge, propose, recommend, request, suggest + that
the expressions: it is desirable, essential, important, necessary, vital, a good/bad idea + that
if, as if/though, lest, wish, suppose

In fixed expressions:
Bless you ( which means: May God bless you)
God save our gracious Queen! (The first line of the British National Anthem)
Long live the bride and groom!
Be that as it may (=Whether that is true or not...)
If we have to pay 100 fine, then so be it (=We cant do anything to change it now.)

22
Other examples:
The manager insists that the main entrance be locked at night.
The board of directors recommended that she join the company.
It is essential that we do something about it as soon as possible.
The President requests that you be present at the meeting.
Romanian people demand that the troops be withdrawn.
She acts as if she were Queen.
Do this now lest you be harried later.

The use of the subjunctive as above is more common in American English than in British English,
where should + infinitive is often used:
The manager insists that the main entrance should be locked at night.
The board of directors recommended that she should join the company.

Negative, Continuous and Passive Forms of Subjunctive

Do is not used in negative subjunctives. Note the word order:

The company asked that employees not accept personal phone calls during business hours.
The President demanded that I be allowed to take part in the negotiations.
I propose that we all be waiting in Andys apartment when he gets home.

Concepte i termeni de reinut: bank statement, current/checking account, savings account, deposit
account, overdraft, bank wire transfer, standing order, direct debit, retail and merchant banks, in the
black, in the red, foreign exchange, subjunctive mood.

ntrebri de control i teme de dezbatere

Which is the most important factor for you when choosing a bank?
Prepare a talk about your banks products and services.
Write one or two characteristics for each type of account:

current account

deposit account

savings account

The removal of money from an account is known as............

[ Grammar] I suggest that you ___________ the job without renegotiating the salary.
a. dont take
b. not take
c. didnt take the job without renegotiating the salary.

23
 Unit 6

The Language of Accounting

Reporting Fina ncial Informa tion

Financial Statements

Financial statements are usually prepared on a quarterly, biannual or annual basis. Most are
drawn up on a yearly (fiscal) basis. Statements provided that are outside of the fiscal closing are
known as interim statements.
Therefore a financial statement can be defined as an accounting report that shows income and
expenses for an accounting period and normally consists of a balance sheet, a profit and loss account
(U.S. income statement) and a statement of cash flows. These year-end financial statements are
drawn up by most accounting professionals.

Balance Sheet
The purpose of a balance sheet is to show what a company is worth. It is like a snapshot of the
firm's position at a specific point in time, usually on the last day of the financial year. It is basically
concerned with the capital of the business and not with its performance.
The balance sheet comprises three major components:
the assets the entity controls (what the company owns)
the liabilities the entity is obliged to meet (money owed for goods or services already received
and
the equity interests of the entity's owners. (the asset value that actually belongs to the owner-in
a corporation, this is usually divided into original capital and retained earnings).
A balance sheet is usually divided into two halves. Assets in one half and owners equity and
liabilities in the other.
The top portion of the balance sheet (or the left side of the page) usually lists the company's
assets in descending order of liquidity. Current assets are cash or its equivalents or those assets that
will be used by the business in a year or less. They include the sum of cash, accounts receivable,
short-term investments, inventory and supplies. Other assets that appear in the balance sheet are
called long-term or fixed assets because they're durable and will last more than one year. Examples of
long-term assets include the following: capital and plant, investments, and miscellaneous assets.
"Total assets" is the sum of total current assets and total long-term assets.
For an item to be reported as an asset it must meet three essential conditions:
there must be some clear expectation that economic benefits will be derived by the business
entity either now or in the future.
the item must be owned by the entity
the item must have been acquired at a measurable cost

The second half of the balance sheet presents the companys liabilities and shareholders/
owners equity. Like assets, liabilities are divided into current and non-current/ long term. Debts
that are due in one year or less are classified as current liabilities. If they're due in more than one year,
they're long-term liabilities. Here are examples of current liabilities: accounts payable and taxes.
Long-term liabilities may cover bonds payable, mortgages payable and notes payable. "Total
liabilities" is the sum of total current and long-term liabilities.
Once the liabilities have been listed, the owner's equity can then be calculated. The amount
attributed to owner's equity is the difference between total assets and total liabilities. The amount of
equity the owner has in the business is an important yardstick used by investors to evaluate the
company. Many times, it determines the amount of capital they feel they can safely invest in the
business.
A balance sheet, as the name implies must balance:
-sources of funds equal employment of funds. In other words: creditors equal debtors. (US accounts
payable vs. accounts receivable).

24
This can be calculated by a simple equation:
assets = liabilities + owners equity /net worth
or
owners equity = assets - liabilities

This is a basic formula that must always be true, unless some kind of fraud or serious errors
have occurred. Since assets represent the way in which funds have been employed, and liabilities and
net worth represent sources of funds (i.e. funds borrowed) this means that:
-employment of funds = sources of funds.
This balance in which for every debit there is a corresponding credit, is the basis of the
accounting procedure known as double-entry book keeping.

Profit and Loss Account / Income Statement (U.S.)

The Profit and Loss Account presents the entity's performance during the current accounting
period. It measures the profit or loss for the period. Unlike the balance sheet which is dealing with the
capital of the business the P&L is basically concerned with the performance of the business.
Therefore the statement will show the firm's trading position in terms of its profitability for the whole
twelve months of the financial year. The components of the P&L account are:
revenue / cash from sales
From this must be deducted:
o cost of sales ( raw materials, labour costs, overheads, depreciation )
What is left when these costs have been deducted are:
o trading profits
From these must be deducted
o interest on loans
This leaves:
o Pre-tax profit
Out of the pre-tax profit must be paid
o Corporation tax
leaving a sum available to be paid either as:
o -dividends to shareholders
or
o -retained in the business
To assess whether a gross profit or a loss has been made over a period a company needs four
figures:
1. the value of the stock at the beginning of the period
2. the cost of the stock acquired during the period
3. the value of sales made during the period
4. the value of stock remaining at the end of the period (at the price it cost the company not at the
price the company hopes to sell it for).
The shortest possible P & L would be:
Revenues Expenses = Profit or net income

Cash Flow Statement

The cash flow statement (CFS) shows how the movements in the balance sheet from the
previous year to the present one have been brought about, so it ties together two consecutive year-
end balance sheets, illustrating the companys ability to earn cash. It is a historic view of the flows of
cash into and out of the business.
Many if not most of the features are the same as in the P &L account. Both statements show
income and expenses. However, the bottom line on the Profit and Loss Account is not the same as in
the Net Cash Flow. But why is this? The answer is quite simple, the figures included in each are
similar but they are not identical. The main differences result from how depreciation and certain
payments are recorded. For example:
Income from sales is entered as it is received, not before. If a credit sale is made, the income is
only entered when the actual bill is paid. In the P&L account, sales are applied to the accounting

25
period in which the sale occurs. So a good sold in one period on credit, is entered as a sale for that
period, even though the payment may not be due until the next accounting period.
In the cash flow statement expenses are entered as paid. In the P&L account, provision is made
in accounts for expenses incurred but not yet paid, these are known as accruals.
Another distinction refers to depreciation. As depreciation is a paper accounting transaction,
not involving actual expenditure, this is not shown. In the P&L account, depreciation is shown as
a business expense.
Also, capital inflows are recorded differently. If a business receives a further injection of
capital that has not arisen from its trading activities then, this is shown in the cash flow statement as a
type of income. The P&L account will only show an inflow of capital that has arisen as a result of
trading activity.

Accounting for bad debts

In the real business world there will always be some customers that may not pay their debts for
a variety of reasons: bankruptcy, dishonesty, or perhaps a dispute with the vendor over the goods or
services supplied. A bad debt is a debt that is considered uncollectable. Bad debts will obviously
reduce the profit of the enterprise .That is why a business must make provisions for doubtful debts so
that the financial statements may reflect the true financial position of the business. The provision for
bad debts will be entered in the P&L account.

Depreciation of fixed assets

One way to treat a fixed asset would be the same as an expense, the full cost being written off
on purchase. However, this technique would negatively affect profits in the year when the asset is
acquired. In order to avoid this consequence, the method used is to spread the cost of the asset over an
estimated period of useful economic life. The spreading concept is known as depreciation. A
common exception to this principle is land, which, unless the business is in mining, need not be
depreciated because it tends to appreciate (gain in value).
Main methods of depreciation are:
Straight line method (also referred to as fixed deduction method)
Reducing balance method (also referred to as diminishing balance method.
The basic formula for straight line method is the following:

(Purchase price of the asset less residual value) / Estimated useful life of the asset

Section B Grammar Review

The GERUND

GERUND = -ING verbal form = used in some particular situations:

as the subject of a sentence (often used as a noun at the beginning of sentences):
o Doing business in Afghanistan is very risky.
o Knowing the Romanian market has helped them a lot.
o Paying taxes is mandatory.
as an adjective (before a noun):
My working day starts at nine and finishes at five thirty.
after prepositions:
o Before working for Unicredit Tiriac Bank I completed a three-year Bachelor's degree
program in Accounting at Spiru Haret University.
o After being in business for just one year, our company made a huge profit.
o The company became successful by selling high volumes at low prices
after certain common expressions / phrases (its no use, its (not) worth, its a waste of
money/time, theres no point in.., look forward to., cant stand.)
o Its no use sending collection letters to Roman Brothers because they went bankrupt.
o We look forward to hearing from you soon.
after some linking words ( despite/in spite of)

26
 o Despite feeling ill, Mary managed to hold down a full-time job.
after certain verbs, employed as a direct object (delay, deny, avoid, enjoy, excuse, keep, miss,
admit)
o A local government official admitted taking a bribe.
o The company denied cheating its customers.
After phrasal verbs: (carry on, give up, keep on, put off)
o We gave up dealing with this company as early as 2010.

Verbs + infinitive or ing

Verbs followed by either ing or infinitive with to, without any change in meaning. :
o Start, continue, begin, intend, hate, cease
I started to work here in 2011.
I started working here in 2011.
Verbs followed by either ing or infinitive with to, with major differences in meaning. :
o Forget, remember, regret = if followed by a gerund they usually refer to immediate past
events/activities. If followed by a to infinitive they refer to actions someone is/was
supposed to do.
I remember paying the phone bill (the action takes place before the remembering).
I remembered to pay the phone bill (the remembering happens before the action. It
means I didnt forget to pay the phone bill).
I regret telling you that I was not interested in the job offer. (we are sorry for something
that happened in the past).
I regret to tell/inform you that you have not been shortlisted for this position. (when we
are giving bad news)
o Go on [ + to infinitive refers to the continuation or change of an activity while with ing
refers to the continuing of an action:
The Romanian Prime Minister went on to talk about salary increase in the public
sector.
The Romanian Prime Minister went on talking about the same old problem.
o Stop [+ ing refers to the ending of an activity, i.e. tells us what has stopped. Stop + to +
infinitive refers to an intention i.e. tells us why something stopped,
Weve stopped doing business with this company.
The bus stopped to pick up some tourists.
o Try [+ing- refers to making an experiment - i.e. do something and see what happens; try
+ to infinitive- is used when we make an effort to do something (which might succeed or
fail].
He tried fixing my car
He tried to fix my car

Concepte i termeni de reinut: assets, liabilities, owners equity, revenue, bad debt, depreciation,
financial ratios, chart of accounts, tangible & intangible assets, current liabilities, return on capital,
pre-tax profit, straight line method.

ntrebri de control i teme de dezbatere

What information is usually included in a balance sheet?

What is the primary source of your revenue? Is the amount of revenue that you will receive
an important criterion in a career decision? Why or why not?

27
 Unit 7

Financial Man agement

Sources of Funds

Private sector

Successful business needs:

workforce/ labour (human resources)
money (capital)
natural resources
enterprise
knowledge
Money is needed:
to pay for raw materials and man-made resources so that goods may be made.
to meet running costs: everything from rate demands, pencils and wages to electricity, gas
bills, paper clips and petrol
This is working capital needed to keep the business running.
Money is also needed to keep the business in business and able to grow, in other words to:
Build new factories
Extend existing ones
Buy machinery, equipment and transport
To replace or renew outdated or worn out equipment
This is fixed capital needed to keep the business properly equipped and able to develop.
Where the money comes from depends on what it is for and how long it is needed.

The four main sources are:

Money earned from the sale of goods or services, retained and ploughed back into the
business;
Money specially set aside to replace particular items of equipment;
Selling assets not essential for running the business;
Borrowing from banks or shareholders.

Working capital for day-to-day expenses is needed all the time; fixed capital is needed when
major items of expenditure are planned. Thus working capital will usually be met by money retained
in the business while fixed capital will largely be met by borrowing.
If costs rise very fast, the money kept in business may not be enough to cover it so money may
have to be borrowed just to keep going. This is a problem of liquidity, of not having enough cash
liquid or on tap as it were, to meet immediate needs. When this happens cash may have to be
borrowed to meet these immediate needs. This creates a new problem since future earnings form sales
must cover the cost of borrowing the cash and paying it back over an agreed period

Sources and uses of short-term and long-term funds

The choice of a source of cash for borrowing will depend upon such considerations as:
Purpose
Interest rates
Length of loan
Repayment terms;
Conditions of loan-security to back loan, etc. and

28
 Amount needed

In general, the sources of finance for a business can be classified into short and long term.
Short-term is usually one to five years, long-term over five years. The principal sources are as
follows:

Short term (1 to 5 years): Creditors, Banks, Hire Purchase, Merchant Banks or Finance
Houses, Leasing companies
Long term (over 5 years): Leasing companies, Banks, Merchant Banks or Finance Houses,
Retained Profits, Share Issues; Government Agencies (Finance for industry, grants, etc).

An alternative way of looking at sources of finance is to consider those which are

internal to the company and those which are external.
Internal sources
a. Long term-
Profits retained in the business
b. Short term
Cash budgets for the forthcoming year will reveal any surplus arising during the year
Dividend policy-the level of dividends could be reduced to conserve cash
Tax reserves (which do not have to be paid immediately)
Within a large company or group some divisions may have surplus funds which could be
transferred to meet shortages elsewhere
The time given to customers to pay for sales could be shortened ( i.e. limiting credit to
customers)
Outstanding customer accounts (those who have not paid their debts to the business)
could be quickly sold to a factor for immediate cash at a discount, leaving the factor (a
third party) to collect from the customer. This is called debt factoring. It is a good way
of raising cash quickly, without the hassle of chasing payments. However, it is not so
good for profits since it reduces the total revenue received from those sales
The time taken to pay suppliers could be extended
Sale of surplus assets which are not required for present operations
Sale of free hold property under a sale and lease back arrangement to realize the capital
value of the property.

External sources
c. Long term
Issuing shares:
Ordinary (equity) shares. Generally these shares carry no fixed rate of dividend and
investors receive a share of the profit only after all other claims have been met. They
give the bearer the right to vote.
Preference shares These shares usually have a fixed rate of dividend and their holders
are paid in full before the ordinary shareholders receive anything. To persuade people to
invest in preference shares the fixed interest is normally a little higher than that yielded
by investments in Government Stock.
Deferred shares. Holders of deferred shares rank for dividend after the ordinary
shareholders have had a percentage of the profits.
Rights issues - an offer to existing shareholders, inviting them to subscribe cash for new
shares in proportion to their existing holdings.
Borrowing:
Loan stock (or debentures). Raising a fixed interest loan repayable after a period of
years. Debentures are not shares and the holders are creditors, and not members of the
company, like the shareholders. Interest payments must be paid before dividends. This

29
 type of loans are often but not always secured. Security is usually related to a specific
asset or group of assets, typically land or buildings.

d. Short term
Bank loans
Bank overdrafts
Hire Purchase (a form of instalment credit similar to leasing with the exception that
ownership of the goods passes to the hire purchase customer on payment of the final
credit instalment).
Other loans. There are various other bodies that will offer loans over short to medium
term, e.g. Pension Funds, Insurance companies etc.
Leasing: This is a form of rental. A lease is an agreement between two parties, the
"lessor" and the "lessee". The lessor owns a capital asset, but allows the lessee to
use it. The lessee makes payments under the terms of the lease to the lessor, for a
specified period of time.
Government finance: The government and the European Union may provide financial
support to businesses in the form of grants for the following reasons:
o Protect jobs in declining industries. (e.g. railroad industry, where decreased demand is
experienced and/or the industry has failed to remain competitive
o Help create jobs in areas of high unemployment.

Sources of public financing and income distribution

Public sector organisations receive from both the normal sources that most businesses receive
money, but also from tax revenues. In order to be able to redistribute some money, the
government has to form the budget first and cover its expenses according to its fiscal policy. The
government levies the money it needs from citizens and businesses through various taxes.

a. Direct taxes (when a person on whom tax is levied is the same who finally bears the
burden of tax)
o Corporate/corporation (income) tax (levied on incorporated entities)
o Personal income tax (levied on individuals, families)
o Property tax
o Dividend tax
o Wealth tax
o Road tax
o Inheritance tax (sometimes classified as a capital transfer tax).
b. Indirect taxes (collected from someone or some organization other than the person or
entity that would normally be responsible for the taxes)
o VAT (value added tax)
o Excise duties/taxes (for certain goods as alcohol, tobacco or patrol)
o Customs duties (when the goods are imported from other countries, - e.g. Romanian
imports from non-euro zone countries)
o Gambling tax

Other non-tax revenue:

o Earnings from state-owned companies and industrial undertaking
o Sales of assets
o Fines, penalties, etc.

Government borrowing (public sector borrowing)

Government can also raise funds by issuing bonds (gilt-edged securities (US treasury bonds).
Bonds are issued for a period of five to thirty years so they are basically long-term instruments.

30
Short-term securities that mature in one year or less from their issue date are called treasury bills
(also T-bills). When one buys one of these securities, he/she is basically lending his/her money to the
government.
Below we outline the income distribution:
o Public education
o Health care
o Defence (the armed services-army, navy, air force)
o Public road construction
o Housing
o Social security benefits
pensions
sick pay
child (care) allowance
disability (living) allowance
maternity allowance
o Unemployment benefits
o Welfare
o Grants, scholarships
o Disaster relief

When a government's total expenditures exceed the revenue that it generates (excluding
money from borrowings) we talk about a fiscal deficit. This deficit is ussualy financed by the issuance
of treasury bonds.
Public finance management includes resource mobilization, prioritization of programmes, the
budgetary process, efficient management of resources and exercising controls.

Section B
Grammar review: the Passive Voice

Voice is the form of the verb which shows whether the subject of the sentence is the doer of the
action or the receiver of the action expressed by the verb. If the subject is the doer of the action, the
verb is in the Active voice. If the subject is the receiver of the action, the verb is in the Passive voice.
The passive is often used to focus on what is done rather than who does it. It is unnecessary or
undesirable to mention the agent (the person or thing that performs or causes the action). The agent
(or performer) of the action, if mentioned, is normally introduced using by.

Structure
At the clause level, changing form active to passive has the following results:
The active subject, if retained, becomes the passive agent
The active object becomes the passive subject
The preposition by is inserted before the agent.

The passive
The verb be Past Participle
subject
is
was wound up
The enterprise has been
had been (closed)

will be
will have been

31
 Use
to focus on something that happens to someone, when we do not want to focus on the person
who does the action because, at the time of speaking, the doer is not important or not known:
o A shop was broken into last night
o This office building was built five years ago.
o Roofs will be made of glass.
to avoid identifying the agent or to take personal responsibility away from the speaker
(frequently used in political discourse as well as in business correspondence:
o Your problem will be looked into
o Our letter has not yet been answered
o Your order can not be shipped until payment has been arranged.
to describe how things are made (daily routine of people or animals who are not free to decide
on, or to carry on this routine for themselves, (children, pets, etc.)
o The animals are fed at seven.
o Breakfast is served between 8.00 and 10.00 a.m.
to avoid using you or one ( in formal and impersonal requests)
o Alcoholic beverages must not be brought into the stadium.
o Passengers are requested not to lean out of the windows.
to express what happens to the subject (in cases where an action undergone by the subject
seems a somewhat forced definition):
o At least 10 people were drowned and many more were missing; their bodies were washed
ashore many miles away.
to describe scientific or industrial procedures or processes (often found in academic writing):
o As is shown in table 5...
o Patients are referred to a specialist after three months

Verbs which cannot be used in the passive

Intransitive verbs cannot be used in the passive since they do not have objects. There is nothing to
act as the subject of a passive verb. The following verbs cannot be used in passive voice: appear,
arrive, come, cry, die, go, happen, occur, rain, sleep, stay, walk.
o (active voice -correct) This idea occurred to me last week.
o (passive voice - incorrect) This idea was occurred to me last week.
Some transitive verbs cannot be used in the passive, at least in certain meanings: (to have, lack, suit,
resemble fit).
o They have a private pool
o (passive voice - incorrect): A private pool is had
o Our business lacks cash
o (passive voice-incorrect): Cash is lacked by our business.

Concepte i termeni de reinut: retained profits, hire purchase, working capital, preference shares,
ordininary shares, leasing, pension funds, repayment, shortage, rights issue, debentures, sale and lease
back agreement.

ntrebri de control i teme de dezbatere

Why do most businesses give credit?

What is the biggest expenditure for you as a student? Why?

32
 Unit 8

FIN AN CIAL MAR KETS

Financial markets serve a very basic purpose: to connect the individuals who have (saved)
money with individuals or businesses who want money to make various investments. In other words
financial markets are institutions through which surplus funds are channelled from savers/lenders to
spenders/borrowers.
Financial markets help people and business entities to trade financial securities, commodities and
other financial products. Main financial securities are the stocks and bonds. Commodities refer
primarily to agricultural products (corn, soybeans, wheat, rice, oats, etc.), industrial metals (copper,
lead, aluminium etc...), energy (crude oil, natural gas, etc.) and precious metals (gold, silver,
diamond). There are many types of financial markets available.

Capital markets consist of stock and bond markets. They provide long-term funds.
Commodity markets facilitate the trading of commodities.
Money markets facilitate short-term financing and investing. Common money market
instruments are treasury bills (T-bills) and certificates of deposit (or CDs).
Derivative markets provide instruments for financial risk management. The main kinds of
derivatives are options and financial futures.
Insurance markets helps in redistribution of various risks.
Foreign exchange market (or Forex market) supports currency exchanges. It is the largest
financial market in the world.

A public limited company (Plc.) can raise money on the stock market or stock exchange in
two different ways. It can issue shares (U.S. stocks) or units of capital, to institutional investors or
the general public. Different types of shares or equities are available, but the most common one are
known as ordinary or common shares (U.S. common stock). When an investor buys a share, using
the services of a specialist company or broker, he or she becomes a shareholder (US stockholder)
and owns a part of (or has a stake in) a company. Shareholders can make money by receiving
dividends.
A company can also borrow money from investors by issuing bonds, loans for fixed periods with
fixed interest rates. The issuer is the borrower while the bond holder is the lender. The former will
have to repay the principal and the interest when the loan gets to maturity.
The term securities refers to both shares and bonds. Each year large numbers of securities are
traded each day on the worlds major stock exchanges such as: The New York Stock Exchange
(NYSE), Tokyo Stock Exchange, London Stock Exchange, Deutsche Brse, or Shanghai Stock
Exchange. Securities traded on stock exchanges have trading prices which fluctuate on a constant
basis. The price that a stock is currently trading at (i.e., what one has to pay to buy one share) is
referred to as the share price.

Main financial centres are New York (Wall Street), London ( the City, also referred to as the
Square Mile), Shanghai ( Pudong Road) Things traded in financial centres include:
Securities: shares and bonds, investment certificates with a fixed rate of interest.
Commodities such as cereals/basic agricultural products and precious metals.
Currencies such as Euro (EUR), British Pound (GBP), United States Dollar (USD),
Australian Dollar (AUD), Canadian Dollar (CAD), Swiss Franc (CHF) or Chinese Yuan
(CNY), can be bought, sold, exchanged or speculated on foreign exchange markets (Forex).

Stocks and Shares are often used as synonyms. However there is a difference in meaning. Stocks
are similar to loans and pay interest. In the UK, they are known as debentures (if issued by
companies) or gilts if issued by the government. The interest is usually at a fixed rate. They are a safe
investment as companies are obliged to pay interest and repay the capital borrowed whether or not the

33
company is making a profit. However, the return on the investment (ROI) is likely to be lower than
on shares.
Expressed usually as a percentage, return on investment is a measure of profitability that indicates
whether or not a company is using its resources in an efficient manner. For example, if the long-term
return on investment of a company is lower than its cost-of-capital, then the company will be better
off by liquidating its assets and depositing the proceeds in a bank. Also called rate of return, or yield.
Shares pay dividends rather than interest. Ownership of a share gives the owner, called a
shareholder, the right to receive a share in the profits of the company and to share in its management.
However, the company may go bankrupt and the shareholders will only be repaid after all the other
creditors.
While shares, or equity securities, represent the purchase of ownership in the business firm, bonds
and debentures represent the borrowing of funds. Bonds issued by companies are called corporate
bonds while those issued by governments are called treasury bonds.

Blue chip shares, blue chip stocks, or blue chips are the safest
share investments in leading companies. (e.g. Coca-Cola, Disney, Intel or IBM). Because the return
on blue chip stocks is close to a sure thing, the stocks are usually expensive and have a low dividend
yield.
A Unit trust (US mutual fund) is a form of collective investment. It is basically an organisation
which enables private investors to own a wide portfolio of securities. These are bought by fund
managers (who are financial experts) and divided into units of equal price which are offered for sale
to the public. Each subscriber becomes the owner of a fraction of all the securities held by the trust
and receives dividends, usually at six months intervals. Thus owners can manage risk by spreading
their investment across a range of different companies while getting the benefit of professional fund
management.

Section B
Basic business correspondence prepared by the finance department

Advice of payment (Date despre efectuarea plii)

We would like to inform you that we have arranged for a credit transfer through our bank, Banca
Romneasc. The transfer is for 3,650 in payment of invoice no. R-1825. Could you confirm the
transfer has been made as soon as the correspondent bank advises you?

Acknowledgement of payment (Confirmarea plii)

We received an advice from our bank this morning that your transfer for invoice no. R-1825 has been
credited to our account. We would like to thank you, and ask you to contact us if you need anything
else.
Collection letters (solicitri/ somaii de plat)

Collection letter #1, Moderate tone

Of course, you have many things to remember besides your account with us. We realize that, but one
of the things you have forgotten is your check for 850.00, due two months ago. Please check your
records.
If you have already sent your payment, please disregard this notice and accept our thanks for your
payment..

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 Collection letter #2, Moderate tone

We are sending this letter to you with regret that previous efforts to obtain payment of your account
have been unsuccessful.
We sent an invoice for 850.00 for payment by June 1,2012. Over the past months, we have tried to
get you to fulfil your obligations to us. We assumed, since you had an excellent credit rating and have
always been responsible in paying your bills before, that some small oversight was to blame.
Please send us your payment for the overdue invoice within five days so that we do not have to turn
your account over to a collection agency....

Chasing late payments / bad debts

(atenionare final privind restana la plat)

Summarize what has happened since the payment was due.

Try to make the bad debtor guilty of his / her behaviour
Remind him / her of your agreement/contract
Say what action you intend to take
See example below:
Dear Mr. James
Re: Invoice 32449

I am writing to you once again regarding the above invoice, dated January 11, 2013, for the
exhibition equipment we supplied to you. This invoice is still outstanding.
According to our records, we have not yet received your remittance or a reply to our previous
requests for payment, dated 18 February and 15 March.
Under the terms of our contract you undertook to settle within thirty days of receipt of our invoice.
We felt, that as the owner of a small business yourself, you would appreciate the effect that late
payments have on our cash flow and therefore, had expected to receive your remittance some time
ago. However, as of today, your account is sixty days overdue.
We will, of course, be able to recover the debt through the courts, which would involve you in
additional legal costs. However Im prepared to give you a final opportunity to settle your account.
Unless I receive full payment within the next seven days, you will leave me no alternative but to put
this matter into the hands of my solicitor.

Yours sincerely,
Marin Ionescu
Chief Financial Officer

Apology for billing error ( scuze pentru facturare eronat)

I would like to apologize for the error we made on our invoice no. F-98C, dated July 15. Im
cancelling that invoice and reinvoicing you as follows:
10 Led TVs Sony 32Ex720 @ 370.00 each...3700.00
10 Led TVs Grundig 32VLC6221@ 300.00 each ....3000.00
5 Led TVs Sharp LE 530@ 310.00 each ..1550.00
5 SONY SS-F6000 Floor Standing Speakers@ 279.00 each pair 1395.00
Subtotal.9645.00
Value Added Tax 2314.80
Total.11959.80
I hope this resolves the issue to your satisfaction. I look forward to doing more business with you in
the future.
Sincerely,
Maria Tudosiu
Chief Accountant

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 Overpayment (suprafacturare)

Enclosed is our check # 22776 for 218.50. You apparently paid your June bill for computer services
twice, resulting in an overpayment of that amount. Ordinarily, we would give you a credit, but since
you have plans to close the office for the months of July and August, we believe you would prefer to
have a check.
Have a good vacation.
Best wishes,
Andrei Grigorescu

Request to customer for financial information (solicitare de informaii financiare)

Dear Mr. James

Thank you for your purchase offer MT-2020. So that we may extend our normal terms of net 30 days,
please provide us with the following information:
- Your annual report
-Name of your bank, account number, and contact
- Names of two suppliers with whom you are presently doing business
We look forward to serving you, and we feel that extending 30-day payment terms is part of that
service. Thank you for your cooperation, and for your order.
Sincerely,
Andrew Logan

British and American terms

BRITISH AMERICAN
gilt-edged stock (gilts) Treasury bonds
property real estate
unit trusts mutual funds
ordinary shares common stock
shareholdersequity stockholders equity
share stock
shareholder stockholder

Concepte i termeni de reinut: stock market, bonds, shares, securities, debentures, foreign
exchange, commodity exchange, NYSE, share price, blue chip shares, unit trust.

ntrebri de control i teme de dezbatere

What are the benefits to a country of having financial centres

Discuss main factors influencing share prices.
Economists often refer to agricultural or mineral products as:
o durables
o blue chips
o currencies
o commodities
o securities

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 Unit 9

INTER N ATIO NAL T RA DE

Export-import operations

International Trade is the process of exchanging goods or services between two or

more countries, involving the use of two or more currencies. The benefits derived from the
development of international trade are numerous, including a wider consumer choice and
higher levels of consumer satisfaction. International trade increases competition and prevents
the monopolistic control of the home market by local exporters. A country that exports more
goods than it imports has a positive balance of trade or a trade surplus. The opposite is a
trade deficit.

Export-import- documentation
A typical export-import transaction may involve some or all of the following documents and records.
Quotation
The quotation states: a) prices at which goods can be supplied b) special export packing,
handling c) terms including discounts available d) cost of carriage of the goods (freight
costs) e) time required for delivery f) banking charges (service fees, interest) f) period for
which the price will remain valid. Where the term carriage forward is used, this means
that payment for transport will be the responsibility of the consignee. Where the term
carriage paid is used, this denotes the carriage charges will be paid by the sender of the
goods.
Pro-forma invoice - similar to a sales invoice except that it is headed pro-forma. It is not a
record of sales effected, but a representation of a sales invoice issued prior to the sale. As it contains
all relevant details, it is used for quotations to customers and for submission to various authorities.
When used as quotation the pro-forma invoice constitutes a binding offer of the goods covered by its
price and condition shown.
Purchase Order is a request by an overseas buyer to be supplied with goods or services.
Export Order acceptance by which the exporter agrees to accept order only if customer will
pay by confirmed letter of credit.
Letter of Credit (L/C): a written undertaking from a bank, at the request of its customer, the
Importer (Applicant) that it will pay the beneficiary (Exporter) so long as he meets the conditions of
the credit. A Letter of Credit is also commonly referred to as a Documentary Credit and is the most
well known method of payment in international trade.
The main points:
an agreement between banks (not buyer and seller).
contract from buyer to seller (not the other way around)
requires proof of specific acts of performance
uses credit line, or ties up cash flow
the wording must match exactly the terms of the credit
Documentary credits are usually irrevocable (i.e. they cannot be changed unless all the parties
involved agree).
Commercial Invoice: is an accounting document through which the Exporter claims payment
from you, the Importer, for goods and services purchased. It provides details about the goods and/ or
services (size, quantity, shipping marks and numbers etc.) as well as the trade terms (CIF, FOB etc.).
It shows practically who shipped what to whom. Where there are several packages in one
consignment the invoice is usually accompanied by a packing list.

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 Packing list indicates which goods are in each carton and since the cartons are numbered this
facilitates Customs inspection. The numbering in a six-carton consignment should read 1 of 6, 2 of 6,
etc.
Consular Invoice This applies particularly in South America. The reason may be concerned
with the countrys need to control foreign exchange to ensure that only essential goods are imported.
Insurance certificate is a proof that the goods are covered for risk of damage or loss during
transit and is often asked for in the documentary credit (L/C)
Bill of Lading is one of the prime documents which ensures the exporter gets paid for his
goods It serves three major purposes
Contract to deliver the goods
Receipt from the ocean-carrier for the goods shipped
Becomes certificate of ownership. It is a document having the force of law.

House Bill (of Lading) B/L is issued for a full container load. If the load has to be broken up
at destination for a number of different customers than, a house bill is issued for each consignee
receiving part of the load
Certificate of Origin (c/o) is prescribed by certain countries as a condition of importation.
Whether or not goods are being imported form an embargoed nation. It may be issued by the exporter
himself or by a Chamber of Commerce or Consular authority, as specified. Its true function is to help
identify the origin of goods for the purpose of levying duties and taxes. It has a further purpose in so
far as it is often used as a means of collecting statistics.
Airway bill (AWB) a receipt for dispatch of goods transported by air detailing all the
information about the flight and destination. It is non-negotiable so it does not carry the same validity
as a bill of lading for sea transport.
Certificate of Health- Agricultural and animal products require a certificate stating that they
comply with the health regulations in the importing country.

TERMS OF SALE
Import and export companies use standard/pre-defined commercial terms called Incoterms- short for
International Commercial Terms, published by the International Chamber of Commerce (ICC)- that
state the responsibilities of the buyer and the seller. The following are a few of the more common
terms used in foreign trade contracts:

CIF (Cost, Insurance, Freight) to a named overseas port of disembarkation (destination) Under
this term the seller quotes a price for goods (including insurance,) all transportation, and
miscellaneous charges to the point of disembarkation from the vessel. (Typically used for ocean
shipments only)

CFR or C & F (Cost and Freight) to a named overseas port of disembarkation (import) Under
this term the seller quotes a price for the goods that includes the cost of transportation to the
named point of disembarkation. The cost of insurance is left to the buyers account. (Typically
used for ocean shipments only).

FOB (Free on Board) at a named port of export. The seller quotes the buyer a price that covers
all costs up to and including delivery of goods aboard an overseas vessel. That is buyer must
charter a vessel and give the seller due notice of the name, loading berth and of delivery dates to
the vessel.(ocean shipments only).

CPT (carriage paid to) and CIP (carriage and insurance paid to) a named place of destination.
Used in place of CFR and CIF respectively for shipments by modes other than water.

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 FAS (Free alongside ship) at a named port of export. The seller must deliver the goods alongside
the vessel at the loading berth named by the buyer, at the named port of shipment, and notify the
buyer that the goods have been delivered alongside the vessel. Loading, ocean transportation and
insurance are left to the buyer including clearing the goods for export. It should not be used when
the buyer cannot carry out directly or indirectly the export formalities.

FCA (Free carrier) to a named place. This term replaces the former FOB named inland port to
designate the sellers responsibility for the cost of loading goods at the named shipping point. It
may be used for multimodal transport, container stations and any mode of transport, including air.

DEQ (Duty paid) Delivered EX Quay

The seller has to bear all the risks and costs including duties, taxes and other charges of
delivering the goods. It should not be used when the seller is unable to obtain the import
licence. The goods should be made available to the buyer on the quay (wharf) at the
named port of destination, cleared for importation.
EXW (ex works) at a named point of origin. (e.g. ex factory, ex mill, ex warehouse) The price
quoted applies only at the point of origin and the seller agrees to load the goods at his own
expense at the date or within the period fixed All other charges are for the account of the buyer.

Section B
Make versus do

The general purpose verb do can sometimes be confused with make.

Form
do did done
make made made

Use
There are no fixed rules about the meaning of make and do. Generally, we use make when there is
an end-product, e.g. make a profit, make a mistake, make a toy and we use do when the activity is an end
in itself, e.g. do business, do a job. Also we use do when we do not say exactly what activity we are
talking about- e.g. with words like something, nothing, anything, what.
I like doing nothing (NOT ....making nothing).
What shall we do?
Below is a list of common combinations/fixed expressions.

DO MAKE

a favour a loss
a service a profit
a job money
repairs an excuse
good an offer
budget a decision
business an appointment
research an agreement
harm a cake
sport a plan
ones best a boat
ones hair a phone call
ones duty progress

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 Useful abbreviations and acr onyms

A E
A/C: account current EFTPOS: electronic funds transfer at point of sale
A/cs Pay also A/cs pay: accounts payable eg: for example
A/cs Rec. also A/cs rec: accounts receivable Enc : enclosure
ACV: actual cash value EPOS: electronic point of sale
adv. pmt. : advance payment eps: earnings per share
A.O.: accountant officer ext: extension
ARR : accounting rate of return F
AS also A.S.: account sales FIFO: first in, first out
ASAP also a.s.a.p.: as soon as possible F.O.B.: free on board (in international shipping )
ATM: automatic teller machine f.o.c.: free of charge
attn.: attention / for the attention of FMCG: fast moving consumer goods
AUI: Auditing Interpretations G
B GAAP: general accepted accounting principles
BBA: Bachelor of Business Administration GL: General Ledger
B/E, also b/e: Bill of exchange GMT: Greenwich Mean Time
B.L., also B/L : bill of lading GNP: gross national product
b.o , also b/o: back order GATT: general agreement on tariffs and trade
B.O.M. Stock: beginning-of-the month inventory GDP: gross domestic product
BRE: Business Reply Envelope H
BSC: business service center HO also H.O.: 1.head office 2. Home Office
C HP: 1.hire purchase 2. horsepower
C/A : capital account HQ: headquarters
cc: carbon copies HRM: human resource management
C& F: cost and freight (in international shipping) I
CEO: Chief Executive Officer (SUA) I/F also IF or NSF: insufficient funds
c/f: carried forward inc: incorporated
CFO: chief financial officer inv. also invt.: inventory
ch.fwd: charges forward IMF: the International Monetary Fund
C.I.A.: cash in advance IOU: I owe you
C.I.F.: cost-insurance-freight (in international IRS: Internal Revenue Service (USA)
shipping
Co : company ISE: international stock exchange
C.O.D.: cash /collect on delivery IT: information technology
CPA : certified public accountant J
C/T: cable transfer JSC: joint stock company
CV: curriculum vitae L
C.W.O.: cash with order LAN: local area network
D London FOX: London Futures and Options Exchange
D/A 1. deposit account 2. Documents against Llds: Lloyds
acceptance
DAP: Documents against payment LBO: leveraged buyout
DBMS: Data Base Management System London FOX: London Futures and Options Exchange
DD: direct debit L/C also LC: letter of credit
deb: 1. debenture 2. debit Ltd: limited
DN: debit note LCE: London Commodity Exchange
DPS: dividend per share LIBOR: London Inter-Bank Offered Rate
d/s , also d.s.: days after sight LIFO: last in, first out
DD: direct debit

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M R
MD: managing director re: with reference to
MIS: management information system ref: reference
MDSG: merchandising rep: representative
MBA: Master of Business Administration Rev. a/c: revenue account
Mr: the title used for a man ROA: received on account
Mrs: the title used for a married woman RORO: roll-on roll-off
Ms: the title used for a married or unmarried woman ROI: return on investment
M.Sc. sau MSc: Master of Science RPI: retail price index
M.Sc. Econ.: Master of Science in Economy re: with reference to
MBO: 1. a management buyout 2. management by ref: reference
objectives
N S
n/a sau n.a.: not applicable Sav.: savings
NASDAQ: National Association of Dealers in SE: single entry (accounting)
Securities Automated Quotation
NAV: net asset value S.E.C. sau SEC: Securities and Exchange Commission
(USA)
n.c.v also NCV: no commercial value SME: small and medium sized enterprise
nil: no number or amount T
NBV: net book value TB: trial balance
No.: number tba: 1. to be agreed 2. to be advised 3. to be announced
NPV: net present value Tessa: tax-exempt special savings account
NYSE: New York Stock Exchange T/O sau TO: turnover
O TPI: tax and price index
OD sau O/D: overdraft TSE: Tokyo Stock Exchange
OH sau O/H: overhead TT: telegraphic transfer
o/s.: 1. (accounting) outstanding; 2. (commerce) out TU: trade union
of stock
OTC : over the counter U
unp. sau unpd.: unpaid
P USM: unlisted securities market
PA: 1. (banking) personal account 2. (commerce) U/W sau UW: underwriter
personal assistant 3. (law) power of attorney 4.
(insurance) particular average
p.a.: per annum V
payt: payment vac.: 1. vacant 2. vacation
pc sau p.c.: percent VAT: value added tax
PCB also p/cb: petty cash book W
PER: price-earnings ratio W: wire
per cent: in or for every hundred WAN: wide area network
PIN: personal identification number WB: 1.way-bill 2. World Bank
P/L also p.l.: partial loss
Q X
qr: quarter x sau xtn.: extension
qty: quantity
qtly. sau Qtly: quarterly
quot.: quotation

41