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4.High quality accounting standards are essential to the efficient functioning of a market economy because decisions about the allocation of capital rely heavily on _________ and understandable financial information.

a)accredited

b)credence

c)credible

d)creditable

5.When issuers prepare financial statements using more than one set of accounting standards, they may find it difficult to explain to investors the accuracy of both sets of financial statements if significantly different operating results, financial _________ or cash flow classifications are reported under different standards for the same period.

a)decisions

b)operations

c)positions

d)transactions

6.Questions about the believability of an entity's financial reporting are likely where the differences highlight how one approach _________

poor financial performance, lack of profitability, or deteriorating asset quality.

a)dwells on

b)masks

c)skims over

d)underscores

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7.Also, the audit is an important element of the financial reporting structure because it subjects information in the financial statements to independent and objective _________, increasing the reliability of those financial statements.

a)autonomy

b)calumny

c)legality

d)scrutiny

8.Recent events in the United States have highlighted the importance of high quality auditing standards and, at the same time, have _________

questions about the effectiveness of today's audits and the audit process.

a)asked

b)assumed

c)mounted

d)raised

9.Audit firms should have a responsibility to _________ to the highest quality auditing practices, on a world-wide basis, to ensure that they are performing effective audits of global companies participating in the international capital markets.

a)abide

b)adhere

c)cohere

d)comply

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10.Historically, audit firms have developed internal quality control systems based on their domestic operations; however, as clients of audit firms have shifted their focus to global operations, audit firms have followed _________ and now operate on a world-wide basis.

a)along

b)practice

c)precedent

d)suit

Test №8 Taxes

1.If you are self-employed, it is your responsibility to _________ how much tax you should legally pay.

a)consider

b)complete

c)correct

d)calculate

2.I had a letter from the office of the Collector of Taxes telling me that I had to pay back all the money I _________ over the last 3 years.

a)due

b)indebted

c)owed

d)owned

3.The arrangement they have is that all the money that has to be paid in tax out of their earnings comes from their _________ account.

a)joined

b)conjoined

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c)joined up

d)joint

4.Under the current legislation if you are late in paying your taxes, then you have to face a financial _________.

a)penalty

b)punishment

c)pain

d)penalize

5.He is in a terrible rush to complete his tax returns by Tuesday otherwise he won't be able to reach the _________.

a)dead end

b)deadline

c)dead date

d)dead stop

6.It doesn't happen very often but I actually got some money from the tax office and with the _________ I'm going to treat myself.

remake repeat refund respite

7.Before you can claim any money back on overpayment of tax, you have to _________ an application form.

a)fill for

b)fill out

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c)fill through

d)fill with

8.You can elect, if you want, to transfer your tax free allowance to your

_________.

a)spouse

b)sponsor

c)spook

d)spokesperson

9.Until it's clearly established which tax group you are in, your employer will be asked to _________ a certain amount of your pay.

a)withstand

b)without

c)withhold

d)withal

10.There have been so many queries about his tax situation that there is now a huge _________ containing the details in the office.

a)full

b)filled

c)filling

d)file

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READING TESTS

Task 1

¾Read the following extract from an article about accounting ratios.

¾Choose the best word to fill each gap from A, B, C or D below.

¾For each question 1 - 6, mark one letter (A, B, C or D) on your answer sheet.

¾There is an example at the beginning (0).

FINANCIAL STATEMENTS AND PROFITABILITY RATIOS

The financial statements of a business provide important information for people outside the business who do not (0) _________ access to the internal accounts. For example, existing and (1) _________ shareholders can see how much profit a business made, the value of its assets and the level of cash (2)

_________. Although these figures are useful, they do not mean a great deal by themselves. In order to (3) _________ any real sense of the figures in the final accounts, they need to be properly analyzed using accounting ratios and then (4)

_________ with either the previous year's ratios or against averages for the industry.

The profitability of a company is important and a key (5) _________ of its success. In the profit and loss account the figures shown for gross profit and net profit mean very little by themselves. However, by (6) _________ them as a percentage of sales they become much more useful. The figures can then be evaluated against those of previous years, or with those of similar companies.

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Task 2

¾Read the following article about the use of graphs in annual reports.

¾Choose the best word to fill each gap from A, B, C or D below.

¾For each question 7 - 12, mark one letter (A, B, C or D) on your answer sheet.

GRAPHS IN ANNUAL REPORTS

Increasing attention is being paid to the visual (7) _________ of corporate annual reports - the charts, photographs and graphs. Academics and practitioners alike (8) _________ the immense power of good visuals in the communication process - a well-designed graph is worth a thousand words.

The existence of graphs of key financial (9) _________ in corporate annual reports is a critical element of communication with stakeholders, especially nonexperts. But graphs are not formally audited and there is the potential for graphs to be (10) _________ so that they give too positive a picture of a company's fortunes.

A recent study has provided evidence that those responsible for annual reports consciously or unconsciously do indeed select graphical designs that tend to convey a more favorable impression than is (11) _________ . We, therefore, urge those who prepare reports to pay close attention to the basic principles of graph design and to seek clarity of meaning, before users lose (12) _________ in the graphs displayed.

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Task 3

¾Read the following extract from an article about evaluating company performance. Think of the best word to fill each gap.

¾For each question 13 - 24, write one word in CAPITAL LETTERS on your answer sheet. There is an example at the beginning (0).

Example:

0

EVALUATING COMPANY PERFORMANCE

It is clear that (0) _________ is a need for companies in both the public and private sectors to develop appropriate performance measures. Setting performance targets and then evaluating achievements against these targets should provide a basis (13) _________ improved management. It is important that these measures are not concerned simply (14) _________ financial issues.

However, many difficulties will confront anyone (15) _________ is tasked with developing a system aimed (16) _________ setting up such targets. For example, the way in (17) _________ objectives are set can present serious problems. In many cases, objectives are (18) _________ vaguely drafted that useful performance measures can rarely (19) _________ developed. Also, there

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is the difficulty of measuring quality, where the danger is that quantity rather (20)

_________ quality is emphasized, because, in almost (21) _________ cases, quantity is easier to evaluate. Therefore, we get a somewhat distorted picture (22)

_________ easily measurable aspects of performance take precedence over those that are more difficult to measure.

(23) _________ the importance of evaluating performance is recognized, the difficulties involved should not be overlooked. An awareness of these difficulties and an understanding of their possible impact should, however, lead (24) _________ the development of more effective and better balanced systems.

Task 4

¾Read the following introduction to a book about international standards of accounting. Use the words in the box to the right of the text to form one word that fits in the same numbered gap in the text.

¾For each question 25 - 30, write the new word in CAPITAL LETTERS on your answer sheet. There is an example at the beginning (0).

Example:

0

IMPLEMENTING INTERNATIONAL STANDARDS

A financial reporting system supported by strong governance, high-quality standards and sound regulatory frameworks is key to economic (0) _________. Indeed, high quality standards of financial reporting, auditing and ethics underpin the trust that investors place in financial and non-financial information and, thus, play an integral role in a country's economic growth and financial (25)

_________.

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As the forces of (26) _________ prompt more and more countries to open their doors to foreign investment, and as business (27) _________ across borders becomes common, both the public and private sectors are (28) _________

recognizing the benefits of having a widely understood financial framework supported by strong globally accepted auditing standards.

The benefits of a global financial reporting framework are numerous and include: greater comparability of financial information for investors; greater (29)

_________ on the part of investors to invest across borders; lower cost of capital; greater (30) _________ in the allocation of resources; and higher economic growth.

Task 5

¾Read the following extract from a website about the future of accountancy.

¾Use the words in the box to the right of the text to form one word that fits in the same numbered gap in the text.

¾For each question 31 - 36, write the new word in CAPITAL LETTERS on your answer sheet.

THE FUTURE FOR ACCOUNTANCY

The profession's future is certain to be more structured, ever more governed by global standards and under more scrutiny from a (31) _________ of national and international bodies. Therefore accountants, particularly those working in small and medium practices, must change their mindset. They must start leading change; embrace (32) _________; continuously improve their skills; invest in technology and demonstrate a fundamental (33) _________ to professional ethics.

Audit will be subjected to unprecedented scrutiny and auditors will have to expect to report on the (34) _________ of their judgment and their lack of bias.

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