4407

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A B

14. Our main competitors are well-informed about our company results, perhaps, C D

they have to find some information about our performance.

A B C D 15. To estimate long-term potential profits a business can have annual sales

forecasts.

A B C 16. Our company is making losses at present. I can't believe that things must have

D

changed for the better soon.

A B

17. We greatly appreciate your help in assessing our industrial potential. We could C D

have made any progress without your data.

A B C

18. Sometimes suppliers of goods and services must not be interested in the long- D

term prospects of a business to avoid risks.

A B C

19. To ensure the efficient and effective allocation of supplies users may not rely

D

on the information provided in financial reports. A B C

20. Competitors could take a keen interest in the financial condition and D

performance of the business they deal with.

Score 1 for each mistake spotted

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Test 3

The ABC of Accounting

Part A

Choose a correct variant

1.It is common knowledge that the double-entry system is ... of accounting which came into existence in the Middle ages.

a)a set of rules

b)the backbone

c)one of the forms

2.Goethe, the famous German poet, called the doubleentry system...

a)a useless thing that had no future.

b)one of the finest discoveries of human intellect.

c)an extremely important function of accounting.

3.The equality of debits and credits can be tested periodically by preparing ...

a)a general journal.

b)a T account.

c)a trial balance.

4.Many accounting historians say, that the double-entry technique made accounting records...

a)more disorderly and less understandable.

b)more comprehensive and orderly.

c)more confused and difficult to understand.

5.The use of the double-entry technique ... business and trade.

a)disorganized

b)had a positive effect on

c)did not influence

6.Some scholars think that the double-entry system ... on economic growth in many countries, and where this technique was lacking, economic development was very slow.

a)had a great influence

b)influenced

c)did not have a positive effect

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7.The double-entry system suggested duality of all economic events. As a rule these two sides ... or balance each other.

a)interchange

b)offset

c)differ

8.According to the principle of duality each transaction ... in such a way that the amount of debits and the amount of credits equal each other.

a)must be recorded

b)must be presented

c)must be designed

9.Under Peter I the double-entry system was first ... to state administration and later it was applied for the Admiralty and the army.

a)transferred

b)introduced

c)invented

10.Since each business transaction ... two items, in the double-entry system each transaction is entered twice, one to show the effect upon one item, and a second entry to show effect upon the other item.

a)affects

b)has an affect

c)does not influence

11.At present new accounting regulations which ... with international accounting standards are being worked out in Russia.

a)have nothing to do

b)comply

c)are similar

12.One of the most important aims of restructuring Russia's accounting system is to develop ... that would enable users to obtain useful information.

a)a set of measures

b)a number of methods

c)a set of accounting standards

13.To meet users' needs certain rules or conventions ... in accounting which facilitate communication of accounting information.

a)were changed

b)are applied

c)are classified

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14.At present many Russian banks are operating in full accordance with ... the Russian Accounting Standards (RAS) and International Accounting Standards (IAS).

a)the decrees of the Ministry of Finance:

b)law requirements:

c)two sets of standards:

15.Unlike IAS Russian accounting standards ... inflation and rely heavily on fulfilling the letter of the country's laws.

a)take into account

b)ignore

c)regard

16.Accounts prepared to international accounting standards are aimed more at... such as shareholders, creditors and potential business partners.

a)internal users

b)tax authorities

c)external users

17.The purpose of accounting conventions is to act as rules on which decisions about... can be taken.

a)accounting transactions

b)the distribution of profits

c)accounting profit

18.The going concern concept is sometimes ... as the continuity convention because it suggests that a business will continue without significant reduction in its operations.

a)known

b)called

c)realised

19.The ... implies that the profit and loss account reflects changes in the amount of net assets that arise out of the transactions of the relevant period.

a)the prudence concept

b)the accruals concept

c)the consistency concept

20.Although there are certain variations within accounting conventions, nevertheless they provide accountants with some ... in order to do their work properly.

a)guidelines

b)regulations

c)provisions

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21. In accordance with international accounting standards the overriding requirement

when preparing financial statements is...

a)the consistency concept.

b)the accruals concept.

c)the fair presentation concept.

22. ... is the application of caution in using accounting concepts. Its use offers the reader of accounts information which may not be fully accurate but that is within reasonable levels of accuracy.

a)Consistency

b)Prudence

c)Historic cost

23.Historic cost gives no idea of... and it is an indicator of the original invoice amount of an asset.

a)the current value of assets

b)how asset values change

c)the effects of inflation on assets

24.Weighing ... of materiality against the costs of producing financial information of greater accuracy gives a useful indication of when to apply the concept and to what extent.

a)the receipts

b)the incomes

c)the benefits

25. ... goes beyond the legal requirements for accountants so that the private and business transactions of a sole trader are kept completely separate.

a)The accruals concept

b)The business entity concept

c)The duality concept

26.According to ... the fixed asset and depreciation are recorded in money units rather than some other measures such as the number of units that the fixed asset can produce, for example.

a)the prudence concept

b)the money measurement concept

c)the materiality and aggregation concept

27. ... of any accounting system are as follows: 1) to gather relevant economic information, 2) to shape it into a suitable form and to communicate to users.

a) The difficulties

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b)The main objectives

c)The functions

28.Some accountants think that most accounting conventions are...

a)too general to be of practical help.

b)helpful for understanding detailed accounting entries.

c)useful when dealing with unusual transactions or situations.

29.Accounting systems of different businesses... considerably in design and level of sophistication.

a)include

b)vary

c)function

30.According to our lecturer on accounting it is very important we ... the latest tendencies in accounting systems design and technology because of many different systems in use and rapidly changing needs of businesses.

a)should know

b)would know

c)will know

31.If businesses had not become so complicated, the role and importance of accounting systems... so much.

a)will not increase

b)would not have increased

c)would not increase

32.If the management of our company... a new system's design next week, the next phase, system implementation would follow.

a)accepted

b)would accept

c)accepts

33.A systems analyst would most likely discover the system needs of a business during ...

a)system investigation.

b)system use.

c)system design.

34.f the systems designer did not keep in mind the main principles of systems design, its installation ... useless and a sheer waste of money.

a)will be

b)would be

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c)would have been

35.I'm sure that if we ... the four principles of system design when installing our computerized inventory system last year it would have been much more profitable than it is now.

a)had followed

b)would follow

c)followed

36.To allow the volume of transactions to grow and organisational changes to be made in the business, ] its accounting system ... enough flexibility.

a)would have

b)should have

c)will have

37.A company organised by product... a system that will report revenues and expenses first by product and then by region.

a)should have

b)should include

c)must be accepted

38.It is essential that the design of a system ... in harmony with the organisational and human factors of a business.

a)would be

b)should be

c)has to be

39.In some cases, companies are ready to spend thousands of dollars on computer systems that ... enough benefits in the future.

a)do not offer

b)would offer

c)have not offered

40.If the most important principles of accounting systems design ... their benefits might be much less than their costs.

a)were not followed

b)had not been followed

c)had not followed

Score 2 for each correct answer. Total 80

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Part B

Find a mistake in the following sentences

A B

1. Computer data processing systems is the most advanced type of data processing C D systems, in which recording, posting and other bookkeeping tasks are done with

D

principles which are helpful in ensuring that the accounting records are accurate. A

7. As is known, without computers large companies, faced with hundreds or B C

thousands of transactions every day, should find it impossible to record D

transactions in journals and post entries to the ledger in an efficient and economical way.

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A

8.The business entity concept assumes that both the fixed asset and depreciation B

is recorded in the business records despite the fact that the business owner C D

would have negotiated the purchase of the fixed asset and would have signed documents and written out the cheque associated with the purchase.

A

9. In accordance with the money measurement concept debtors, bad debts and B

provisions are recorded in monetary terms. Thanks to this concept a clear basis C D

should be available to measure the extent of the good or bad debts.

A C D

10. The true and fair view set the parameters within which accountants work and apply conventions, concepts and bases.

A B

11. By their nature, accounting methods is more diverse and numerous than C D

fundamental concepts, since they have evolved in response to the variety and complexity of types of businesses and business transactions.

A

12. Following several years of decline, the managing director of our company B C D

dismissed and replaced by a new one with a reputation for cost cutting and strong abilities to reorganise failing businesses.

A B C

13. Unlike accounting bases which are in fact methods developing for applying fundamental accounting concepts to financial transactions, accounting policies

D

are specific accounting methods used by a particular enterprise.

A B

14. The presence of an IAS audit among the leading Russian banks have led to C

greater confidence with their potential business partners and a definite

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D

competitive advantage over the banks that have entirely stuck to the old RAS system.

A B C 15. As is known, even financial statements preparing on a current cost basis, may

D

lose some meaning in a period of high inflation.

A

16. According to accounting experts existing accounting rules are believed to have B

created difficulties and additional costs for economic entities because they have C D

to restate their accounts into international standards when they raise foreign investments or a loan.

A B

17. In contrast to the IAS system, the information presented in Russia's financial C D

statements are oriented towards the demands of tax authorities and cannot be used by investors for analysing the situation of the company.

A

18. There are grounds to believe that the implementation of international B

accounting standards into the Russian financial reporting system is increasing C

investment attractiveness of Russia's economy and the range of potential D

investors will expand as well.

A

19. The Russian financial reporting rules will be gradually changed on the IAS B C

basis because the rules applying at present do not enable outside users of D

financial statements to make timely and adequate decisions concerning the financial status of a business and its performance.