Comprehension

1. Answer the following questions.

1. Are there any rules relating to accounting?

2. What agency sets rules in the USA?

3. What organization is responsible for establishing accounting standards in Britain?

4. What are the basic principles of GAAP?

5. How can you become a certified public accountant in the USA?

6. What are the main requirements to a CPA in the USA?

7. What should you do to become a chartered accountant?

Vocabulary

2. Match the principles with their explanations.

1. Economic entity assumption	a) This accounting principle assumes that a company will continue to exist long enough to carry out its objectives and commitments and will not liquidate in the foreseeable future
2. Monetary unit assumption	b) This accounting principle assumes that it is possible to report the complex and ongoing activities of a business in relatively short, distinct time intervals
3. Going concern principle	c) Under the accrual basis of accounting (as opposed to the cash basis of accounting), revenues are recognized as soon as a product has been sold or a service has been performed, regardless of when the money is actually received
4. Time period assumption	d) Economic activity is measured in U.S. dollars, and only transactions that can be expressed in U.S. dollars are recorded
5. Matching principle	e) The accountant keeps all of the business transactions of a sole proprietorship separate from the business owner's personal transactions. For legal purposes, a sole proprietorship and its owner are considered to be one entity, but for accounting purposes they are considered to be two separate entities
6. Revenue recognition principle	f) This accounting principle requires companies to use the accrual basis of accounting. The matching principle requires that expenses be matched with revenues

3. Fill in the prepositions.

1. The objectivity principle says that accounts should be based … facts and not on personal opinions or feelings.

2. Companies with subsidiaries … different countries have to convert their results into one currency in consolidated financial statements for the whole group … companies.

3. The principle … materiality says that very small and unimportant amounts do not need to be shown.

4. Companies have to disclose all relevant financial information … their annual reports.

5. The matching principle requires that expenses be matched … revenues.

6. It is necessary to pass exams … Accounting.

7. The applicant must study accountancy … a college or university.

8. To become a Chartered Accountant, the applicant must apply … a training contract with a recognized company.

4. Match the two parts of the sentences.

1. In Britain	a) accounting rules are established by a government agency
2. In most of continental Europe and Japan	b) companies are mainly funded by shareholders
3. In the USA	c) accounting rules are set by an independent organization
4. In Britain and the USA	d) the major source of corporate finance is banks
5. In much continental Europe	e) accounting rules are set by the government