According to the test, are the following true or false?
1. Accounting is used to describe the transactions entered into by all kinds of organisations.
2. Accounting can be divided into 6 phases.
3. Accounting is actually limited to the actual making of records.
4. Accounting can show the owners of a business whether or not the business is operating at a profit.
5. Assets and liabilities, profits and losses are listed in balance sheet.
6. The principle of double-entry bookkeeping appeared in the 14th century.
7. Balance sheets are drawn up daily.
8. The double-entry system divides each page into two halves.
1.2. Find English equivalents for the following Russian phrases from the text:
Ключевой элемент экономической системы; финансовые результаты хозяйственной деятельности хозяйствующего субъекта; сделки, в которые вступают различные организации; получение, обработка и передача информации; отражение информации в финансовой отчётности; работать с прибылью; выполнять свои обязательства; бухгалтерское равенство; активы должны быть равны пассивам; в балансе отражаются…; учёт по принципу двойной записи; отражать в балансе; составлять баланс; счёт прибылей и убытков.
1.3. Add the word account, accounts or accounting to each of the words below:
| 1. ……………holder 2. ……………methods 3. ……………day 4. ……………equation 5. ……………payable 6. ……………principles 7. ……………period 8. ……………procedures 9. ……………receivable 10. ……………standards | 11. ……………book 12. bank…………… 13. current…………… 14. deposit…………… 15. cost…………… 16. managerial…………… 17. numbered…………… 18. profit and loss…………… 19. savings…………… 20. tax…………… |
1.4. Now complete the following sentences:
1. Auditors are supposed to make sure that companies follow their stated …………… .
2. Companies can choose from a variety of ……………, but they are not allowed to change them too often.
3. Lots of money obtained in dubious or illegal ways is deposited in …………… in Swiss banks.
4. The basic …………… is Assets = Liabilities + Owners’ Equity.
5. The …………… at the London Stock Exchange usually lasts two weeks. It is followed by an …………… on which all bills must be settled.
6. The …………… is one of the three basic financial statements.
7. …………… consists of money that is expected to be received. The contrary, ……………, consists of money that is owed to other people.
8. The role of …………… is to provide figures and statements that will aid decision-making.
1.5. Match the verbs from (a) with the nouns from (b) below:
| a) | to meet to ensure to harmonize to develop to assess to provide to give to enhance to grant to achieve | b) | needs provision of information standards performance service a boost license accounting standards targets credibility |
1.6. Supply the prepositions where necessary:
1. The objective of financial statements is to provide useful information … users.
2. Among the users are present and potential investors, lenders, suppliers and customers, employees, governments … home and host countries, the public at large, and also those who act … behalf of users.
3. The objectives of financial statements are defined … the needs of users.
4. In general, information must be provided about the financial position, performance and changes … financial position of an enterprise.
5. Such information is useful to a wide range … users in making decisions and is necessary to keep management accountable … the resources entrusted … it.
6. Financial statements can also provide … useful information to governments for making policy decisions, although governments often require special-purpose reports as well.
7. More specifically, a variety of users need to be able to assess the performance of an enterprise and thus are interested, among other things, … the cash flow of the enterprise.
8. For example, investors must know if they will receive … dividends and when they should buy, hold and sell stock.
9. Lenders are interested in determining whether interest and principal … loans will be paid when due.
10. Suppliers, other creditors and customers must determine whether they will be paid … time or will continue to receive a product or service on which they might depend.
11. Employees are interested in the continuation of their employment and, therefore, in the stability and profitability … their employment.
12. Members of the public are also interested in the impact of the activities of the enterprise … the general welfare.
1.7. Open the brackets putting the verbs in the correct form:
1. In the West each company (to have) a certain freedom in the design of its own set of accounts so as to reflect the nature of its business and the needs of its management in directing that business.
2. In Russia this process (to regulate) centrally, there (to be) a tradition of using a uniform Chart of Accounts.
3. The first uniform Chart of Accounts (to appear) in Russia in the 1920s.
4. It (to intend) for industries only and was revised periodically.
5. In 1961 the first national uniform Chart of Accounts (to create) and put into operation.
6. With only insignificant changes, this chart (to use) in accounting practice until 1992.
7. In 1992 transition to a new chart (to make).
8. The current Chart of Accounts (to consist) of about 100 accounts and 60 subaccounts grouped into 10 main sections.
9. All accounts included in this uniform chart (to call) “synthetic” (main or summary) accounts.
10. The Chart of Accounts can be considered the most important element of the accounting system in Russia because it (to determine) the accounting practice and other elements of the system.
11. The Chart (to provide) for the following: an interrelated classification, grouping, and generalization of information about business activities of enterprises, a unified methodological basis for the organization of accounting in the whole national economy, an effective system of control of indicators for business activities, comparability of accounting procedure used and information generated in the accounting systems of different enterprises, etc.
1.8. Match the remarks on the left with the responses on the right:
| 1. You’re an accountant? Does that mean you spend your time writing down credits and debits, and adding up columns of figures all day? Can’t be very exciting. | a. Ha! Now you’re going to ask me to tell you how you can pay less tax. |
| b. No, managerial accountants do, but I work in cost accounting. We have to work out the real cost of each item the company makes, which means finding a way to allocate all the overheads to different products. | |
| 2. So what do accountants do? | c. No, not only, Managers always need the help of accountants. They need financial statements, and budgets, and cash-flow projections, and so on, to measure the success of what they’ve done, and to make decisions about allocating resources for future projects. |
| 3. You mean the shareholders? | |
| 4. So you prepare reports for managers? | d. Of course. But like I said, we’re necessary. And useful. Haven’t you heard of “window dressing”? |
| 5. And the cost of the accounts department! 6. You mean what they do in the front of shops? | e. Sure, but it’s also another name for what some people call “creative accounting” – making a company’s financial situation look as good as possible in the balance sheet, and so on. It’s not very legal, but it happens. The accountants in my firm also have lots of wonderful ways of reducing our tax bill. |
| 7. Ah, now that’s interesting… | f. That’s bookkeeping. Not quite the same thing. |
| g. Well, accountants, do record cash flows, and the value of assets and liabilities, and they calculate profits and losses, and so on. But it’s not just writing down numbers. We’re really in the business of supplying people with information. | |
| 8. Not at all. As a matter of fact, I’m a tax inspector… |
1.9. Match up these six accounting principles with the definitions below:
1. The separate-entity or accounting entity assumption
2. The continuity or going-concern assumption
3. The unit-of-measure assumption
4. The time-period or accounting period assumption
5. The historical cost principle
6. The revenue or realisation principle
a. All transactions and other items to be accounted for must be in a single, supposedly stable monetary unit.
b. An enterprise is an accounting unit separate from its owners, creditors, etc.
c. Financial data must be reported for particular (short) periods, which makes accrual and deferral necessary.
d. Revenue is realised at the moment when goods are sold (or change hands) or when services are rendered.
e. The business will continue indefinitely into the future.
f. The initial price paid for the acquisition of assets is the one that is recorded in accounts.