III. Which of the following statements are correct?

1. Being defined as an information system accounting measures, communicates useful information for decision-making.

2. Financial accounting is a system of classifying and recording monetary transactions of an entity and the presentation of the results of these transactions and the entity’s financial position at the end of the accounting period.

3. Unlike financial accounting, management accounting deals with less detailed information.

4. Financial accounting reports provide a general overview of the financial position of a business.

5. Management accounting reports are produced less frequently than financial accounting reports.

6. As a rule, financial accounting reports always include forecast information.

7. Forms and content of financial reports are never regulated.

8. A special set of practices has been developed to provide guidelines for interpreting accounting reports.

9. Generally acceptable accounting principles are unchangeable, they are just like “laws” of nature found in physics or chemistry.

IV. Reread the text to find out which of its paragraphs deals with:

1) differences between financial accounting reports and management accounting reports;

2) the definition of accounting;

3) generally accepted accounting principles.

V. Here are some sentences that make up the second paragraph of the text. Put them in the right order.

1. But in contrast to the management all outside users are satisfied with less detailed information.

2. Financial accounting reports are not produced as frequently as management accounting reports.

3. According to the text, financial accounting refers to accounting information used internally by management and outside users.

4. In this sense management accounting reports may be called forward-looking while financial accounting reports are, as a rule, backward-looking because they focus on actual results achieved.

5. Financial accounting provides a general overview of the financial position of a business.

6. Financial accounting reports may be used to evaluate the financial position of a business and make comparisons.

7. Financial accounting reports rarely include forecast information while management accounting reports usually contain that sort of information.

8. Suffice it to say that financial accounting reports are produced annually, whereas management accounting reports are produced every month.

9. The form and content of financial reports are regulated by the law and accounting organisations.

VI. Answer the following questions.

1. What is the definition of accounting, according to the text?

2. What types of accounting are there?

3. What sort of information does financial accounting refer to?

4. What sort of information are all outside users satisfied with?

5. What information is required for management?

6. What do financial accounting reports usually provide?

7. How often are financial accounting reports produced as compared with management accounting reports?

8. Which reports generally include forecast information?

9. What guidelines are used to interpret accounting reports?

10. What are generally accepted accounting principles?