📖 The Story

Sarah sat at her desk and looked at Tom’s business papers. ‘Tom, we need to talk about your money,’ she said. ‘First, let’s look at your cash flow. This shows the money that comes in and goes out of your business,’ Sarah explained. Tom looked worried. ‘Is something wrong?’ ‘Well, you have a creditor who wants money from you. But you also have a debtor who needs to pay you money,’ Sarah said. ‘Your overhead costs are high. These are the regular costs like rent and electricity,’ she continued. Sarah opened her journal. This was her special book where she wrote all money activities. She needed to do a reconciliation to check if the numbers were correct. ‘There is a variance in your numbers,’ Sarah said. ‘The plan and the real numbers are different. ‘Tom looked confused. ‘What about my business equity? This means the money that is really mine in the business.’ ‘We need to look at two more things,’ Sarah said. ‘First is accrual. This means we count money when we earn it, not when we get it. Then there is amortization. This means we spread big costs over many months.’ ‘I understand better now,’ Tom said. ‘You make these big words easy!’

⚙️ Main Grammar Points

1. Present Simple Tense- Used to explain accounting concepts: ‘This means…’- Shows regular actions: ‘We count money…’

2. Past Simple Tense- Used for specific actions: ‘Sarah sat at her desk’- Shows completed actions: ‘Tom looked worried’