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Part A: Grammar and Vocabulary

1……. are careless when disposing of their garbage.

1) People

2) People who

3) The people who

4) That people

2. Water vapor changing to liquid heat.

1) release

2) releases

3) relesing

4) in released

3. Only after a baby seal is pushed in to the sea by its mother



2

………to swim.

1) it 'will learn how

2) how will it learn

3) and it learns how

4) will it learn how

4. It's difficult to ………. these statistics without knowing how

they were obtained.

1) derive

2) establish

3) interpret

4) circulate

5. It's sometimes very difficult to make a clear ……… between



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the different meanings of words.

1) concept

2) transfer

3) distinction

4) conclusion

6. reports said that seven people had died, though this was not

confirmed later.

1) Initial

2) Excessive

3) Apparent

4) Sufficient

7. He damaged his leg so badly in the accident that the bone was



4

………

1) emerged

2) exposed

3) excluded

4) indicated

8. My schedule is quite …….. I can arrange to meet you any day

next week

1) flexible

2) accurate.

3) arbitrary

4) voluntary

9. Some of these, educators are hoping to introduce new ideas so

to change the current cultural …….



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1) simulation

2) paradigm

3) extinction

4) inference

10. I don't want to her achievements, but she did have a lot of

help.

1) collapse

2) estimete

3) encounter

4) diminish

Part B: Cloze Test

Element may be the basic building blocks of matter, but what - if

anything- makes up the elements? In other words what would be



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the result of taking an element, a piece of gold, for example, and

….11…it in half, and in half again, au infinitum. We would soon

reach the point of having ….12…. small piece of gold that it would

be beyond our ability to cut it. It is at times like these when

scientists must use their knowledge about how elements react to

continue the experiment in their minds. Scientists have done just

that and have agreed that if they continue to cut a piece of gold in

half - they would ….13…. reach a particle called the atom (in this

case, an atom of gold). The atom is the smallest part of an element

that retains the chemical ….14….. of the element.· One gold atom

is so small that billions of them are required to make a tiny speck of

gold that can be seen with a microscope. The atom, therefore is the

basic particle which …15…. the elements. Gold is composed of

gold atoms, iron of iron atoms, and oxygen of oxygen atoms.

11. 1) cut 2) cute 3) to cut



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4) cutting

12. 1) so much 2) too 3) such a

4) very

13. 1) inherently 2) eventually 3) effectively

4) fundamentally

14. 1) schemes 2) compounds 3) properties

4) circumstances

15. 1) substitutes 2) encompasses 3) accompanies

4) constitutes

Part C: Reading Comprehension

PASSAGE 1:

Bookkeeping and record - keeping methods, created in response

to the development of trade and commerce, are preserved from



8

ancient and medieval sources. Double - entry bookkeeping

began in the commercial city - states of medieval Italy and was

well developed by the time of the earliest preserved double -

entry books, from 1340 in Genoa.

The first published accounting work was written in 1494 by

the Venetian monk Luca Pacioli. Although it disseminated

rather than created knowledge about double - entry

bookkeeping, Pacioli’s work summarized principles that have

remained essentially unchanged. Additional accounting works

were published during the 16th century in Italian, German,

Dutch, French, and English, and these works included early

formulations of the concepts of assets, liabilities, and income.

The industrial Revolution created a need for accounting

techniques that were adequate to handle mechanization,

factory - manufacturing operations, and the mass production of



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goods and services. With the emergence in the mind - 19th

century of large, publicly held business corporations, owned

by absentee stockholders and administered by professional

managers, the role of accounting was further redefined.

Bookkeeping, which is a vital part of all accounting systems,

was in the mid-20th century increasingly created out by

machines. The Widespread use of computers broadened the

scope of bookkeeping, and the term data processing now

frequently encompasses bookkeeping.

16. The best title for the passage would he .

1) The Types of Record - Keeping Methods

2) The Historical Background of Bookkeeping

3) The Principles of Double - Entry Bookkeeping

4) The Effect of the Industrial Revolution of Accounting



10

17. Bookkeeping is now mainly considered .

1) as vital as the other accounting systems

2) less important that double - entry bookkeeping

3) a branch of data processing

4) a mid - 20th century invention

18. The word "disseminated" in line 7 is closest in meaning

to ................................................................. .

1) accepted

2) included

3) spread

4) taught

19. The 15th and 16th centuries witnessed .



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1) the increasing importance of monks

2) original knowledge about accounting

3) the use of the first accounting system

4) the formulation of principles which are still valid

20. The development of bookkeeping shows that .

1) early accountants were needed to help Italian traders

2) a number of accounting books were published in 1600-1700

3) some bookkeepers reacted against medieval businessmen

4) accounting techniques were first created during the Industrial

Revolution

PASSAGE 2:

Recording a transaction in a journal marks the starting

point for the double _ entry bookkeeping system. In this



12

system, the financial structure of an organization is analyzed

as consisting of many interrelated aspects, each of which is

called an account (for example, the "wages payable"

account). Every transaction is identified in two aspects or

dimensions, referred to as its debit (or left side) and credit (or

rith side) aspects, and each of these of these two aspects has

its own effect on the financial structure. Depending on their

nature, certain accounts are increased with debits and

decreased with credits; other account are increased with

credits and decreased with debits, For example, the purchase

of merchandise for cash increases the merchandise account (a

debit) and decreases the cash account (a credit). If

merchandise is purchased on the promise of future payment,

a liability would be ereated, and the journal entry would

record an increase in the merchandise account (a debit) and



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an increase in the liability account (a credit). Recognition of

wages earned by employees entails recording an increase in

the wage - expense account (a debit) and an increase in the

liability account (a credit). The subsequent payment of the

wages would be a decrease in the cash account (a credit) and

a decrease in the liability account (a debit).

21. The passage mainly discusses .

1) the two aspect of transactions

2) the structure of organizations

3) the journals used to record transactions

4) the early days of the double - entry bookkeeping system

22. The purpose of the example in the passage is to explain .

1) the reasons for on increase in debits



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2) the factors effecting the nature of transactions

3) two key differences between a debit and credits

4) the relationship of accounts with debits and credits

23. The word "entails" in line 12 is closest in meaning

to...........

1) involves

2) trains

3) works

4) writes

24. In contrast to a credit, a debit .

1)is positively related with the cash account

2)increases when merchandise in bought for cash



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3)shapes the nature of financial structures

4)is based on the promise of future payment

25. According to the passage, it is NOT true that .

1) future payment leads to liability

2) credits and debits are recorded on the same side

3) a debit increases whenever a credit increases

4) an account may cause an increase or a decrease in debits

PASSAGE 3:

Of the various specialized areas of accounting that exist,

the three most important are auditing, income taxation, and

nonbusiness organizations. Auditing is the examination, by

an independent accountant, of the financial data, accounting

records, business documents, and other pertinent documents



16

of an organization in order to attest to the accuracy of its

financial statements. Businesses and not-for-profit

organizations in some in some countries engage certified

public accountants (CPAs) to perform audit examinations.

Large private and public enterprises sometimes also

maintains an internal audit staff to conduct auditable

examinations. The second specialized area of accounting is

income taxation. Preparing an income - tax form entails

collecting information and presenting data in coherent

manner; therefore, both individuals and businesses frequently

hire accountants to determine their taxes. Tax rules, however,

are not identical with accounting theory and practices. Tax

regulations are based on laws that are enacted by legislative

bodies, interpreted by the courts, and enforced by designated

administrative bodies. A third area of specialization is



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accounting for nonbusiness organizations, such as

universities, trade and professional associations, and

government agencies. These organizations differ from

business enterprises in that they receive resources on some

nonrecipreeating basis (that is, without paying for such

resources), they od not have a profit orientation, and they

have no defined ownership interests as such. As a result, they

call for differences in record keeping, in accounting

measurements, and in the format of their financial statements

26. The first specialized area of accounting .

1) begins with auditing non-business organizations

2) is based on the examination of documents

3) mainly concerns large enterprises

4) is the most important one



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27. The word "they" in line 19 refers to .

1) such resources

2) ownership interests

3) business enterprises

4) these organizations

28. According to the passage, income taxation .

1)marks the second phase of auditing

2)requires the operation of certified accountants

3)is based on law passed by courts and administrative bodies

4)does not necessarily depend on theoretical accounting

29. The third area of accounting is characterized by all of the

following EXCEPT …..



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1) bringing the process of accounting to an end

2) being related to non - profit organizations

3) covering organization receiving resources

4) including accountings in educational centers

30. According to the passage, it is true that .

1) audit staff should always be independent of organizations

2) business enterprises pay for their resources

3) individuals often consult accountants with respect to their

taxes

4) people pay taxes due to the force coming from administrative

bodies

31- Two measures that or of interest to stockholders in evaluating

the dividend policy of the firm are the dividend yield and the



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dividend…..

1) per share

2) payout ratios

3) received

4) per common stock

32- Sometimes, accounting estimates have to be revised to reflect

new financial information. In such cases, …..

1) the cumulative effect of these changes is not recorded

2) prior statements are revised.

3) Correction entries involving retained earning are made

4) The change affects both the past and the future

33- If 100,000 shares of common stock, having a par value of one

dollar per share, were sold for a price of 10 dollars per share, what



21

figure would the paid-in-surplus show?

1) 1,000,000 dollars

2) 100,000 dollars

3) 1,100,000 dollars

4) 900,000 dollars

34- If the stock is issued at a price above par the account ….

1) premium on common stock will be debited

2) discount on common stock will be credited

3) paid-in-capital in excess of par will be credited

4) capital stock will be credited

35- Cumulative preferred stock is entitled to …..



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1) cash dividends only if they are earned

2) cash dividends whether or not the company earns them

3) a stated rate of dividends and also profit share available to

common stock

4) Receive dividends even when the company does not have

sufficient current earnings.

36- When the books at a branch are closed …..

1) Income Summary is debited and Home Office is credited

2) Home Office is debited and Income Summary is credited

3) Branch current is debited and Home Office current is credited

4) Home Office Control is debited and Home Office current is

credited

37- In preparing the annual financial statements for the company



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……

1) The branches should be regarded as separate accounting

entities

2) The home office and branches should be considered affiliated

companies

3) The sales agencies should be assumed separate legal entitles

4) The home office and branches should be considered

38- The determination of whether a company is producing

products efficiently and effectively is included in…..

1) compliance auditing

2) performance auditing

3) financial auditing

4) governmental auditing



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39- Which of the following best describes the operational audit?

1) It requires constant review by internal auditors of the

administrative controls as they relate to the operations of the

company

2) It concentrates on implementing financial and accounting

controls in a newly organized company.

3) It concentrates on seeking out aspects of operations in which

waste would be reduced by the introduction of controls.

4) It is designed to verify the fair presentation of a company’s

result of operations.

40- Operational auditors should review operations and programs

to ascertain whether….

1) results are consistent with established goals and objectives



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2) the rules, regulations, and policies, having significant impact

on operations, have been complied with

3) the financial statement have been audited in accordance with

GAAP.

4) the balance sheet reflects the financial position of the company

under consistency principle

41- The tree types of accounting changes are change in

accounting principle, change in accounting estimate and …..

1) correction of prior period errors

2) change in depreciation method

3) change in reporting entity

4) correction of inventory method

42- The ability of a business unit to pay its long-term obligations



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when they become due is referred to as its…..

1) liquidity

2) solvency

3) working capital

4) current ratio

43- The ratio of net sales to assets is a good means of comparing

companies in regard to their…..

1) utilization of assets

2) profit per share

3) profit margin

4) liquidity

44- The method of recording the uncollectible accounts expense

at the time of actual customer uncollectibility is known as …….



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Method.

1) the credit sales

2) the receivables analysis

3) the allowance

4) the direct write-off

45- If a company wishes to keep its taxes to a minimum, it

should select ….. method.

1) the process

2) the FIFO

3) the weighted average

4) the LIFO



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46- The inventory valuation method which is based upon the

determination of unit price by dividing the total cost of goods

available for sale by the total number of available units is known as

…… method

1) the weighted average

2) the FIFO

3) the LIFO

4) the specific identification

47- As compared to financial accounting, which is concerned

with historical aspects of external reporting, management

accounting emphasizes the use of the cost data for …..

1) stockholders and creditors

2) external financial statement users



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3) planning and decision making

4) internal auditor

48- Management accounting does not primarily include the

responsibility for….

1) the provision of financial information to managers

2) the preparation of the financial statements

3) the evaluation and controlling

4) the planning and decision-making activities

49- The governmental funds category is made up of the general

fond, special revenue funds, ….

1) capital projects funds, and debt service funds

2) trust funds, capital projects funds, and debt service funds

3) capital projects funds, debt service funds, and enterprise funds



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4) the general fixed assets account group, and the general long-

term debt account group

50- The general fixed assets account group should be used to

account for fixed assets constructed or acquired to be used in the

operations accounted for by …… fund.

1) an internal service

2) a special revenue

3) an enterprise

4) a nonexpendable trust

Part A: Vocabulary and Grammar

51- Symptoms of the illness include a high temperature and a(n) -

--------- dry cough.

1) effective



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2) persistent

3) respected

4) considerate

52- You can protect the floor with ---------- sheets of newspaper

if you want to paint the walls.

1) mediating

2) restricting

3) overlapping

4) approaching

53- Modern examples of this type of weaving for Persian carpets

in the region show little --------- from traditional patterns.

1) deviation

2) relevance



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3) application

4) permanence

54- The road ---------- the highway a mile from here - you can't

miss the signs for it.

1) intersects

2) interferes

3) intervenes

4) intercepts

55- The love and support of his family --------- him during his

time in prison and made him feel less desperate there.

1) resolved

2) sustained

3) assumed



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4) determined

56- Anita had a(n) --------- arrangement with her brother - each

would take care of the other's children if the need arose.

1) adjacent

2) coherent

3) analogous

4) reciprocal

57- Despite some doubts by the experts, the ---------- of this

painting to Rembrandt had never been questioned.

1) attribution

2) simulation

3) association

4) specification



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58- You had better not ---------- the car unlocked in this area - not

even for a minute.

1) left

2) leave

3) to leave

4) leaving

59- He is studying mathematics so as ---------- for higher salary.

1) to qualify

2) qualifying

3) qualification

4) he qualifies

60- No sooner had he drunk the coffee ---------- he began to feel

drowsy.



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1) that

2) when

3) than

4) which

Part B: Cloze Test

A person with poor self-esteem (11) ---------- a major struggle in

work and relationships with other people. If you put (12) ----------

value in yourself, others will not value you, (13) ------------ want to

be with you. For if you are self-centered and don't have any real

concern for (14) ----------, you will be, in fact, harmful to your

community. And if a person has positive feelings (15) -----------

himself they need to be balanced by a concern for other people

l)

facing

2)

faces

3) is

faced

4)

that



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faces

1)

some

2) a

little

3)

little

4) a

great

deal

1) or

won't

they

2) nor

they will

3)

or

they

won't

4)

nor

will

they .

1) the

others

2)

other's

3)

others

4)

the

others'

I) of 2) by 3)

with

4)

about

PASSAGE 1:



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In the normal course of business, a document is produced each

time a transaction occurs. Sales and purchases usually have

invoices or receipts. Deposit slips are produced when lodgements

are made to a bank account. Cheques are written to pay money out

of the account. Bookkeeping involves recording the details of all. of

these source documents into a journal. In the single entry system,

each transaction is recorded only once. Most individuals who

balance their cheque-book each month are using such a system, and

most personal finance software follows this approach.

Businesses, however, usually use a more complex double entry

system, where each document is recorded as multiple journal

entries, the totals of which always have to balance. This allows a

business to know much more information about its current financial

position. As well as how much money is currently in the bank, it

can easily tell how much it owes it suppliers, how much customers



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owe it, how much tax is due, etc. These journal entries are then

transferred to a ledger, or book of accounts.This bring all of the

amounts recorded for that account from the journal together. This

process of transferring the values is known as posting. Once the

entries have all been posted, the ledger accounts are added up in a

process called balancing. A particular working document called an

unadjusted trial balance is created. This lists all the balances from

all the accounts in the ledger. Notice that the values are not posted

to the trial balance, they are merely copied. At this point accounting

happens. The accountant produces a number of adjustments which

make sure that the values comply with accounting principles.

61- Which of the following is TRUE according to the passage?

1) A transaction is the normal product of a document



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2) No sales or purchases can be carried out without an invoice

3) Lodgements to a bank account usually follow the records of

book keeping

4) Cheque-books are often balanced monthly using the single

entry system

62- It is implied in the passage that ----------.

1) the single- entry system is of little use to businesses

2) a business is not concerned with its past financial position

3) personal finance software are closely related to documents in a

journal

4) documents are recorded as multiple journal entries if the

system is complex

63- The word "which' in line 9 refers to ----------.



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1) ‘multiple journal entries’

2) 'double entry system'

3) ‘each document’

4)' totals'

64- The passage mentions that --------.

1) a ledger and the values posted to the trial balance form part of

the accounting adjustments

2) an unadjusted trial balance can be developed only after the

processes of posting and balancing

3) suppliers, customers and the account balance are of equal

value in the double-entry system

4) account keeping systems are extremely concerned about the

tax a business has to pay



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65- The word 'comply' in line 20 is most closely related to an ----

---.

1) 'indication'

2) 'estimation'

3) 'agreement'

4) ‘assessment’

PASSGE 2

In the late 1980s, accounting practitioners and educators were

heavily criticized on the grounds that management accounting

practices had changed little over the preceding 60 years, despite

radical changes in the business environment. Professional

accounting institutes, perhaps fearing that management accountants

would increasingly be seen as superfluous in business

organizations, subsequently devoted considerable resources to the



42

development of a more innovative skills set for management

accountants. The distinction between 'traditional' and 'innovative'

management accounting practices can be illustrated by reference to

cost control techniques. Traditionally, management accountants'

principal technique was variance analysis, which is a systematic

approach to the comparison of the actual and budgeted costs of the

raw materials and labor used during a production period. While

some form of variance analysis is still used by most manufacturing

firms, it nowadays tends to be used in conjunction with innovative

techniques such as life cycle cost analysis and activity-based

costing, which are designed with specific aspects of the modern

business environment in mind. Lifecycle costing recognizes that

managers' ability to influence the cost of manufacturing a product is

at its greatest when the product is still at the design stage of its

product lifecycle, since small changes to the product design may



43

lead to significant savings in the cost of manufacturing the product.

Activity-based costing recognizes that, in modern factories, most

manufacturing costs are determined by the amount of 'activities'

and that the key to effective cost control is therefore optimizing the

efficiency of these activities. Activity-based accounting is also

known as Cause and Effect accounting. Both lifecycle costing and

activity-based costing recognize that, in the typical modern factory,

the avoidance of disruptive events is of far greater importance than

reducing the costs of raw materials.

66- It is stated in the passage that ----------.

1) cost control techniques provide some of the best examples for

innovative accounting practices

2) the development of modern management techniques for

accountants has a 60 year - old history



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3) management accounting practices have changed little over the

past 60 years

4) the business atmosphere of the 1920s differed considerably

from that in the 1980s.

67- The passage mentions that --------.

1) variance analysis has always been a favourite technique for

management accounts

2) life cycle cost analysis and activity-based costing can only be

used as part of variance analysis

3) variance analysis is not considered as an independent

technique in management accounting today

4) comparison of the costs of raw material and labour develops

systematically in the production period



45

68- Which of the following is TRUE according to the passage?

l) Lifecycle costing is most effectively applied at the stage of

product design.

2) Effective cost control depends on optimizing the methods of

cost assessment.

3) Small changes to product design are possible after the close

analysis of production processes.

4) Modern factories determine their manufacturing costs based

only on activity-based costing.

69- It is mentioned in the passage that --------.

1) variance analysis is sometimes of far greater significance than

activity-based costing

2) cause and effect accounting is a key branch of activity-based



46

costing in production management

3) the cost of raw materials in production is not so important as

happenings that can stop the work

4) a manager's ability to influence the cost of manufacturing a

product relies on his cost-cutting activities

70- The word 'superfluous' in line 5 most closely means ----------.

1) 'insufficient'

2) 'indeterminate'

3) 'unavailable'

4) 'unnecessary'

PASSAGE 3:

Any comprehensive scheme of accounting reform is a major

professional and academic enterprise; Typically it requires



47

examination of the role of each of the fundamental factors of

production, an analysis of capital indicating how many types there

are and how each supports each factor of a production process. A

comprehensive scheme that would affect, for instance, the United

Nations standards for national accounts, the rules of the Bank for

International Settlements, or listing requirements on the major stock

exchanges, would have to defend any change against critics that

advocated lesser reforms - making it extraordinarily difficult to

achieve simultaneous consent. Marilyn Waring, who deeply

criticized the UN account system for systematically under-valuing

the social and economic contributions of women, stated also that

she had to read literally an entire room full of books in order even

to understand the standards applied today. It seems unlikely that

most advocates of reform have the stamina to do so, nor the

background required to debate each issue with economists or



48

accountants that build their careers on the detailed extension and

improvement of standards that already exist. Most critics

considered reform prospects bleak. The critique from ecological

economics was even more fundamental, claiming that most means

of measuring well-being indicated that the developed nations were

in a state of "uneconomic growth" through the 1980s and 1990s,

due mostly to failures of measurement, most or all of which could

be tracked back to the practice of using the Gross National Product

as a means of making money supply decisions. This is perhaps the

most obvious and widely-held critique of current national

accounting and economic growth reporting systems - the creators of

the GNP and GDP measures themselves advise against its use as a

single measure of economic growth - but politicians and press

typically do so without caveat nor apology.

71- Which of the following is TRUE according to the



49

passage?

1) Major professional and academic enterprises often involve

schemes of accounting reform.

2) The fundamental factors of production would support each

other in a professional enterprise.

3) The United Nations standards for national accounts is affected

by comprehensive accounting reform.

4) A comprehensive scheme of accounting reform rests partly on

an examination of the types of capital in an enterprise.

72- We may understand from the passage that ---------. ,

1) the accounting reforms taking place in big organizations are

not often huge and comprehensive



50

2) supporters of accounting reform do not usually appreciate the

problems involved in economic changes

3) Marilyn Waring is in favour of a change in the UN account

system after understanding the standards applied.

4) the accounting standards applied at the UN today undervalue

the contributions of women

73- Which of the following is the reason for the 'uneconomic

growth' mentioned in the passage?

1) 'measurement of well-being'

2) 'failures of measurement'

3) 'Gross National Product'

4) 'money supply decisions'



51

74- The passage is most probably taken from a longer text on

----------.

1) accounting reforms in national economies

2) the accounting reform prospects in the United Nations

3) GNP and GDP .as indicators to national economic growth

4) the role of the UN in carrying out major accounting

reforms

75- The word' caveat' in the last line means ----------.

1) principle

2) warning

3) definition

4) authority

76- All of the following are ways to show disbursements except:



52

1) use depository transfer checks

2) use drafts

3) establish a zero balance system

4) match transfers with check clearing

77- A limitation of shareholder wealth maximization as the goal

of the firm is:

1) lacks a time dimension

2) not totally within a firm’s control

3) ignores risk

4) none of the above

78- Which phrase best describes the goal of the firm?



53

1) maximization of earnings per share

2) risk minimization

3) shareholder wealth maximization

4) profit maximization

79- A net capital loss is:

1) deducted from ordinary income for tax purposes

2) carried back three years and carried forward five years

3) used only to offset capital gains

4) both (2) and (3)

80- You are thinking about investing in general co. Common

stock. Which of the following examples of risk can not be

diversifies away?



54

1) increase in the rate of inflation

2) death of key general company executive

3) potential strike of general company employees

4) product liability suit against general company

81- A dividend charged to and hence deemed to be paid from

paid-in capital

1) capital expenditure

2) capital gain

3) capital dividend

4) capital asset

82- Assuming that two bonds are similar except for their

maturities, which is the sensitivity of the price movements of the

shorter-term bond to a given change in the marker interest rate



55

relative to the longer-term bond?

1) more sensitive

2) less sensitive

3) equally sensitive

4) more information is needed to determine relative sensitivity

83- The first step in preparing a cash budget is to

1) estimate cash receipts

2) forecast sales

3) estimate cash disbursements

4) select the time horizon

84- The probability of technical insolvency is reduced by

1) financing permanent assets with short-term



56

2) financing fluctuating assets with long-term debt

3) maintaining a high level of liquid assets

4) both (2) and (3)

85- working capital is important for all the following reasons

except that is:

1) consumes a small portion of the financial manager’s time

2) consists of a large portion of a firm’s total assets

3) affects a firm’s liquidity and profitability

4) consist of those assets that are most manageable

86- which of the following items would not be identified if a

contingent liability were disclosed in a financial statement

footnote?

1) the nature of the item



57

2) the expected outcome of the future event

3) the amount of the contingency, if known

4) a numerical probability of the expected loss

87- The basic E.O.Q model determines the optimal inventory

level at which

1) total revenue is maximized

2) total inventory costs are minimized

3) carrying costs are minimized

4) inventory is minimized

88- Which of the following is included in a project’s terminal

cash flow?

1) before-tax salvage value of a project



58

2) after tax salvage value of a project

3) releases working capital

4) both (2) and (3)

89- The cost of capital may be defined as:

1) the rate that the firm has to pat to investors for its capital.

2) the minimum required rate of return that the firm must earn on

new investments in order to maintain the market value of its

common stock.

3) the minimum rate of return required by suppliers of the firm’s

capital.

4) all the definition

90- What does “write off” mean?

1) To transfer the balance of an account previously regarded as



59

an asset to an expense account or to profit and loss.

2) to record an increase in the book value of an asset, not

represented by an outlay of each or other property.

3) To transfer a portion of the balance of an asset account to an

expenses account or to profit and loss.

4) To record an decrease in the book value of an asset, not

represented by an outlay of each or other property.

91- What doe reconciliation mean?

1) To give expression on books of account.

2) A statement of changes in surplus during an accounting

period.

3) The determination of the items necessary to bring the balances

of two or more related accounts or statements in to agreement.



60

4) To convert into cash of other current asset.

92- What does nominal account mean?

1) The amount of account represented by the par or stated value

of a corporation’s issued stock.

2) The balance of which are transferred to profit and loss at the

close of each fiscal year.

3) The portion of an asset or liability account.

4) The cost of purchases plus freight-in.

93- The risk-adjusted discount method incorporates risk in to the

capital budgeting process by.

1) Assigning risky projects higher discount rates than normal

projects.

2) Assigning risky projects lower rates than normal projects.



61

3) Discounting all projects by the firm’s cost of capital regardless

of risk.

4) Discounting all projects by the risk-free rate.

94- Which of the following is not an advantage of a private

placement over a public offering?

1) Greater speed of raising funds than a public offering.

2) Lower flotation costs.

3) More flexibility than a public offering.

4) Lower interest rate on debt

95- Which type of inventory financing provides the least amount

of security to the lender.

1) Trust receipts



62

2) field warehousing agreement

3) blanket lien

4) public warehousing arrangement

96 The most likely………seemed to be that both parties would

agree to remain friends.

1) context

2) target

3) contrast

4) outcome

97 Her management skills were the ……… on which she built

her career.

1) restraints

2) foundations



63

3) innovations

4) implications

98 Unfortunately there has been a substantial increase in human

rights………..

1) violations

2) proportions

3) consultations

4) perspectives

99 I’m afraid she has a very busy …………. At the moment and

she doesn’t have time for interviews.

1) schedule

2) procedure

3) commitment



64

4) interaction

100 If you are rude to other people, your child will ……… that

this kind of behavior is acceptable.

1) invoke

2) conform

3) assume

4) estimate

101- The government has ………..strong opposition to its plans

to raise income tax.

1) resolved

2) encountered

3) marked

4) transformed



65

102) More details of the plan………..at yesterday’s meeting.

1) evolved

2) debated

3) emerged

4) released

103) Russia……………..a group of islands near Japan at the end

of the Second World War.

1) founded

2) displaced

3) occupied

4) eliminated

104) Since retiring Martha has been doing ……… work for the

Red Cross.



66

1) mutual

2) voluntary

3) arbitrary

4) inevitable

105) She can stay her………., while she’s looking for an

apartment.

1) specifically

2) consistently

3) considerably

4) temporarily

Grammar

Health is clearly an important concern (11)……. both individuals

and the planet as a whole. (12)……..many illnesses have been



67

eradicated, others remain a threat, and the overuse of antibiotics

(13)………..to the development of resistant types of bacteria.

Nevertheless, on the whole, general health (14)……., and in

developing countries medical aid programs are already working

(15)…….creating a healthier population.

11- 1) affects 2) it affects 3) that affects

4) that it affects

12- 1) since 2) despite 3) because

4) even though

13- 1) has led 2) is led 3) leads

4) has been led

14- 1) improved 2) is improving 3) is improved

4) will be improved

15- 1) in 2) for 3) with



68

4) toward

PASSAGE 1

A good is an object whose consumption increases the utility of

the consumer, for which the quantity demanded exceeds the

quantity supplied at zero price. Goods are usually modeled as

having decreasing marginal utility. The first car an individual

purchases is very valuable; the fourth is much less useful. Thus, in

these and similar goods, the marginal utility of additional units

approaches zero as the quantity consumed increases. Assuming that

one cannot re-sell it, there is a point at which a consumer would

decline to purchase an additional car, even at a price very near zero.

This is the consumer’s satiation point.



69

In some cases, such as the above example of a car, the lower

limit of utility as quantity increases is zero. In other goods, the

utility of a good can cross zero, changing from positive to negative

through time. This means that what initially is a good can become a

bad if too much of it is consumed. For example, shots of vodka can

have positive utility, but beyond some point, additional units make

the consumer less happy, that is, they would not be chosen.

In economics a bad is the opposite of a good. Ultimately, whether

an object is a good or a bad depends on each individual consumer,

and therefore, it is important to realize that not all goods are good

all the time, and not all goods are goods to all people.

106- What would the best title be for the above passage?

1) Consumer’s Satiation point

2) Utility Characteristics of Goods



70

3) Not All Goods are Goods to All People

4) Production and Consumption of Goods

107- According to the passage, the first things a person buy is

more useful than the fourth, which means………

1) goods have increasing marginal utility

2) goods have falling marginal value

3) quantity demanded exceeds quantity supplied

4) quantity demanded exceeds quality provided

108- If a consumer cannot re-sell a good, he or she

would………..another at some point, which is called satiation

point.

1) refuse to sell



71

2) decrease to sell

3) refuse to buy

4) decrease to buy

109- According to the passage, the lower limit of utility as

quantity increase…………

1) is always zero

2) is sometimes below zero

3) always crosses zero and becomes positive

4) always crosses zero and becomes negative

110- The author finally concludes that an object is……….

1) relatively good based on the user

2) absolutely good based on the time.



72

3) definitely good based on the user and the time.

4) unconditionally good at all times and to all people

PASSAGE2:

A good or commodity in economics is any object or service that

increases utility, directly or indirectly, not to be confused with good

in a moral or ethical sense (see Utilitarianism and consequentialist

ethical theory). A good that cannot be used by consumers directly,

such as an office building or capital equipment, can also be referred

to as a good as an indirect source of utility through resale value or

as a source of income. A 'good' in economic usage does not imply

moral acceptance or even legality.

If an object or service is sold for a positive price, then it is a good

since the purchaser considers the utility of the object or service

more valuable than the money. Some things are useful but not



73

scarce such as air and are referred to as free goods.

In macroeconomics and accounting, a good is contrasted with a

service. A good here is defined as a physical (tangible) product

capable of being delivered to a purchaser and involves the transfer

of ownership from seller to customer, as opposed to an (intangible)

service. A more general term that preserves the distinction between

goods and services is 'commodities' .In microeconomics a 'good' is

often used in this more inclusive sense of a commodity.

111- What does the passage mainly discuss?

1) Utility of an Object or Service

2) Good in a Moral or Ethical Sense

3) Good in Economics and Accounting

4) Distinction between Goods and Services



74

112- Office building and capital equipment adds to utility ……..

1) by means of resale value

2) through moral acceptance

3) indirectly by means of legality

4) directly as a source of earnings

113- According to the passage, -- be regarded as goods.

1) plentiful objects like air can

2) scarce things such as water can

3) useful objects like wild animals cannot

4) precious things such as gold cannot

114- In accounting, there is……… between a good and a service.



75

I) a minor difference

2)a great distinction

3) no significant distinction

4) no remarkable difference

115- As far as microeconomics is considered, the author finally

concludes that 'good' is ……..

1) a touchable product

2) contrasted with 'service'

3) an object delivered to a buyer

4) frequently employed in the sense of 'commodity'

PASSAGE 3



76

In the late 1980s, accounting practitioners and educators were

heavily criticized on the grounds that management accounting

practices (and, even more so, the curriculum taught to accounting

students) had changed little over the preceding 60 years, despite

radical changes in the business environment. Professional

accounting institutes, perhaps fearing that management accountants

would increasingly be seen as superfluous in business

organizations, subsequently devoted considerable resources to the

development of a more innovative skills set for management

accountants.

The distinction between 'traditional' and 'innovative' management

accounting practices can be illustrated by reference to cost control

techniques. Traditionally, management accountants' principal

technique was variance analysis, which is a systematic approach to

the comparison of the actual and budgeted costs of the raw.



77

Materials and labor used during a production period.

While some form of variance analysis is still used by most

manufacturing firms, it nowadays tends to be used in conjunction

with innovative techniques such as life cycle cost analysis and

activity-based costing, which are designed with specific aspects of

the modern business environment in mind. Lifecycle costing

recognizes that managers' ability to influence the cost of

manufacturing a product is at its greatest when the product is still at

the design stage of its product lifecycle.

116- What would the possible topic be for the above passage?

1) Professional Accounting Institutes

2) Accounting Practitioners and Educators

3) Life Cycle Cost Analysis and Activity-based Costing

4) Traditional vs. Innovative Management Accounting Practices



78

117- According to accounting practitioners and educators, the

subjects provided for accounting students have ………

1) changed little over the subsequent 60' years

2) changed largely during the following 60 years

3) not changed much during the past six decades

4) not changed at all over the previous six decades

118-Prefessiuual accounting institutes allocate remarkable

resources to new skills so that management accountants …….

1) could not easily be deceived

2) could not easily be betrayed

3) would not be regarded as supervisors .

4) would not be considered redundant

119- The author refers to cost control approaches so as to ---



79

between 'traditional' and 'innovative· practices.

1) ignore the difference

2) overlook the similarity

3) explain the similarity

4) demonstrate the difference

120- It can be concluded from the passage that many

businesses ……. ones.

1) uses innovative techniques without referring to traditional

2) apply conventional approaches to modern

3) direct modern techniques towards conventional

4) employ traditional approaches together with innovative

121. What does the distribution and use of scarce resources in society

require?



80

122. What are the two main groups of accounting information users?

123. Which branch of accounting employs both estimated and future

data?

124. What is the phase of accounting that measures, records, classifies,

and summarizes daily economic activities of a business enterprise?

125. What does give the assurance that management's reports were, in

large part, reliable?

126. To make sound (decide), user's groups must have reliable

information provided by, the accounting system.

127. Large corporations are (account) to many parties in the society.

128. Accounting for (govern) activities requires a somewhat different

approach.

129. The primary use of accounting (inform) is for decision making.

130. External users have (supply) money to the business.

131. The accounting function has evolved into two specialized fields:



81

(manage) and financial accounting.

132. Financial accounting is concerned with the (measure) and

recording of transactions for a business enterprise.

133. Each day's financial activities must be measured, recorded,

classified, and (summarize).

134. What does an income statement show?

135. What are the two elements of an income statement?

136. How do you define revenue?

137. What factors cause the owner's equity to increase?

138. Give few examples for expenses.

139. Name the elements of a balance sheet.

140. What does a balance sheet show?

141. How do you define assets?

142. What are called the amounts owed by a business to the others?

143. (corporate) prepare two other statements to users.



82

144. In the case that expenses exceed revenues, the result would be a

net (lose).

145. A business (usual) receives cash or acquires an account

receivable.

146. (like) revenue, an expense always causes the owner's equity to ,

decrease.

147. Some assets exist in the form of (value) legal claims or rights.

148. These items are then divided into several (sub-classify).

149. Which statement shows the financial position of a business

enterprise?

150. What are the elements of an income statement?

151. Define the elements of a balance sheet.

152. What are the two formats for preparing an income statement?

153. A balance sheet can be prepared using two forms. What are they?



83

154. Which statement shows the changes in the owner's equity?

155. What are the three activities by which cash flows are classified

during a period?

156. How can we prepare a report form balance sheet?

157. What are the two main books that accountants use, when they

record transactions of a business?

158. The equality between the total of assets and the total of liabilities

plus owner's equity is one reason for (call) the statement of financial

position, a balance sheet.

159. The total claims of (credit) plus the claims of the owner equal the

total assets of the business.

160. The (equal) of assets and of the claims of creditors and the owner

is expressed in the equation.

161. A balance sheet is (simple) a detailed statement of the accounting

equation.



84

162. Creditors have (prefer) rights to the assets.

163. Accountants prepare financial statements in a (system) way.

164. The claims of creditors are shown by the (liable).

165. Transactions are first recorded in the (journalize) and then in the

ledger.

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85

166. Which book is used to first record of transactions?

167. What is an account?

168. What are the major sections ofaT account?

169. Explain the rule of debit and credit for assets

accounts.

170. Which side of a liability account is to record

increases?

171. How can the normal balances of an account is

determined?

172. What is a chart of accounts?

173. In which order accounts in the ledger are appeared?

174. What is a trial balance prepared for?

175. the accounts comprise a record called a …

176. The left side of the account is known as the ……..,



86

whereas the right side is the …….

177. Increases in all liability accounts are …..

178. Decreases in all revenue accounts are …

179. Increases in expenses are debited because they

decreases.

180. The simplest form of an account is called the…

181. Numbers and names for all the accounts appear in the

…

182. An initial book for recording all transactions is

known as ….

183. The process of recording transactions in the journal is

termed ….

184. The journal is a ... record of all transactions.

185. A journal entry which has more than two debits and



87

or credits is called a ... entry.

186. The effects of transactions must be recorded in a

(time) and systematic manner.

187. The (simplify) form of account, which we use it to

show illustrations, is called T account.

188. The rules of debit and credit and the normal balances

of the (vary) types of accounts are summarized below.

189. (Try) balance is a base to prepare financial

statements.

190. The process of (transfer) the debits and credits from

the general journal to the ledger accounts is called posting.

191. The (simple) type of journal, which has only two

money columns, is called a general journal.

192. Each business transaction is (initiate) recorded in a



88

book known as journal.

193. Under the cash basis accounting, when revenues and

expenses are recorded?

194. Which basis of accounting best matches revenues

with expenses?

195. What are the four types of adjusting entries?

196. What is the adjusting entry for $ 5,000 salary expense

incurred but not recorded?

197. What is a post-adjusted trial balance?

198. Is the worksheet a formal document? i 7. What is a

worksheet?

199. An (alter) to the cash basis accounting is the accrual

basis of accounting.

200. The accrual basis of accounting provides a (real)



89

picture of the profitability of the business.

201. To work (success), an accrual basis accounting

requires the use of adjusting entries at the end of each

accounting period.

202. All trial balance amounts are not (necessary) correct.

The amounts listed for prepaid expenses are (normal)

overstated.

203. An (accrue) basis accounting requires the use of

adjusting entries at the end of the accounting period.

204. The related amounts in the journal must be

transferred to ledger accounts by the process of (post).

205. One way of (avoid) errors in the permanent

accounting records as well as simplifying the work is to

use a work sheet.



90

206. A work sheet is a large (column) sheet of paper.

207. Preparation of the worksheet is an (option) procedure

in the accounting cycle.

208. What are the elements of the basic accounting

equation?

209. Adjusting entries are classified into four types. What

are they?

210. Which accounts must be closed at the end of the

period?

211. When do accountants prepare a post-closing trial

balance?

212. Which book of the company shows all aspects of

transactions?

213. Which book is called the book of original entry?



91

214. What is the aim of a reversing entry?

215. A journal, which is a book of (origin) entry, keeps a

chronological track of transactions in one place.

216. The (refer) column of both journal and ledger must be

cross(refer).

217. A trial balance also (cover) errors in journalizing and

posting.

218. (Accord) to accrual basis, of accounting, revenues

must be recorded in the period in which they are earned.

219. It is often (help) to reverse some of the adjusting

entries at the beginning of the next period

220. In preparing the closing entries, an account titled

Income (Sum), is used for summarizing the data in the

nominal accounts.



92

221. What do merchandising enterprises do?

222. How do retailers differ from wholesalers?

223. Name .the contra revenue accounts for merchandising

enterprises.

224. What is the difference between sales return and sales

allowances?

225. What does it mean by the term credit 3/20-n/60?

226. What are the factors needed to compute cost of goods

sold?

227. What does FOB stand for?

228. In a FOB shipping point purchase agreement, which

party must. pay the freight charges?

229. What are the two systems of inventories?

230. The accounting cycle and the steps therein for a



93

(merchandise) company are the same as for a service

enterprise.

231. Measuring net income for a merchandising company

is (concept) the same as for a service enterprise.

232. According to the revenue (recognize) principle, sales

revenue is recorded when earned.

233. Sales agreement should indicate which party is to pay

the cost of (transport) goods to the buyer's place of

business.

234. Merchandising enterprises buy and sell goods instead

of (perform) services to earn profit.

235. The purchaser saves money and the seller converts

the account receivable into cash (early).

236. As in the case of purchase return and (allow),



94

purchases discount is a contra account to purchases.



95

237. What cost elements do manufacturing costs include?

238. How many and what types of inventories must a

manufacturing enterprise have?

239. What is the difference between a period cost and a

product cost?

240. How should the overhead application rate be

calculated?

241. Which account is debited when raw materials are sent

to the production process?

242. What does the credit balance of the direct labor at the

end of period show?

243. Give some examples of manufacturing overhead

costs.

244. What is called a debit balance of the overhead



96

account at the end of the period?

245. What is the offsetting credit for a debit entry in the

overhead controlling account for actual overhead costs?

246. Cost of goods sold consists of various (manufacture)

costs.

247. Overhead controlling account shows actual and

estimated overhead costs in debit and credit side (respect).

248. The conversion from raw materials to finished goods

results from (utilize) a combination of labor and

machinery.

249. (Use) the estimated rate, overhead costs are applied to

products.

250. The balance of the overhead account (show) a

variance for overhead costs.



97

251. Manufacturing overhead is allocated to products

trough the use of overhead (apply) rates.

252. Overhead costs cannot be (easy) and (direct) traced to

specific units of production.

253. Balance of the overhead account shows a variance for

overhead costs, which could be (overapply) or

(underapply).

254. This account is credited when the (work) contribute

to the production process during the period.

255. (Produce) costs are considered as an asset when they

occur.

256. Overhead costs include factory utilities, (supervise)

salaries, equipment repairs, and (depreciate) of machinery.

257. What is cash?



98

258. What are the four different formats of bank

reconciliation?

259. What document is prepared to find missing

transactions and errors made by the bank and by the

company?

260. What does business enterprises use to make small

payments for which drawing checks is not practical?

261. SLWhat is a voucher system used for?

261. What are called the amounts customers owed to the

company?

262. What is an open account?

263. What are the two methods of accounting for doubtful

accounts?

264. Which method of accounting for doubtful accounts



99

matches revenues and expenses properly?

265. What are the two additional allowances account for

receivables?

266. Name two methods for discounting notes receivables.

267. What are the two methods for estimating inventories?

268. What are called errors that will be automatically

corrected over two years?

269. What is the first task in accounting for inventories?

270. What basis is used to allocate total price of a basket

purchase over each item in the basket?

271. What are inventories of a manufacturing company?

272. Which method of inventory pricing is in accord with

the actual flow of units?

273. What are the two systems for inventories of



100

merchandises?

274. Inventory (determine) plays an important role in

matching expired costs with revenues of the period.

275. When goods (purchase) as a basket, the total price

paid for goods is allocated to items in the basket purchased

to find the cost of each item.

276. Goods in on consignment (exclude) from ending

inventory because they are the legal property of another

company.

277. When taking a physical inventory or (maintain)

perpetual inventory records is (practice) or impossible, two

methods of estimating inventories may be used.



101

278. In which category of investments should debt

securities be classified as held to maturity?

279. What are the four methods for carrying out business

combinations?

280. What is the main reason that causes business

combinations occur?

281. What does accounting for long-term investments

depend on?

282. How many groups does SFAS No. 115 classify

investments into?

283. To classify a debt security as held to maturity, what

criteria should

be met?

284. In which situation use of equity method is required?



102

285. What other titles may be used as long-term assets?

286. Which expenditures should be included in a fixed-

asset's cost?

287. What are called expenditures that increase the useful

life of a plant asset?

288. How do we treat expenditures made as additions to

the asset?

289. What is the difference between depletion and

depreciation?

290. What are the two classifications of assets for

accounting purposes?

291. What is the main factor that distinguishes tangible

from intangible assets?

292. What characteristics does an intangible asset usually



103

have?

293. Does physical substance always guarantee the

existence of economic value?

294. How the cost of intangible assets is determined?

295. Under which concept is goodwill considered as a

separate account?

296. What is the main reason that justifies the existence of

goodwill?

297. Give some examples of current liabilities.

298. What are obligations expected to be liquidated by use

of current liabilities called?

299. What is the difference between estimated and other

liabilities?

300. Give two examples for estimated liabilities.



104

301. How do we recognize contingent liabilities?

302. What is the accounting treatment for contingent

liabilities?

303. Why do we record product warranties?

304. What is the main difference between a non-interest-

bearing note and an interest-bearing one?

305. What is a fringe benefit?

306. What are two ways of long-term financing which may

be adopted by business enterprises?

307. What characteristics does a long-term debt have?

308. What does a bondholder entitle to receive?

309. What is the accounting treatment for bond issuance

costs?

310. When will a bond be sold at par?



105

310. What methods of amortization for bond premium or

discounts is used?

311. When does a troubled debt restructure occur?

312. What are the three forms of businesses?

313. Which form of organizations is most dominant?

314. What are the primary disadvantages of corporations?

315. What is called the owners' equity of a corporation?

316. What class of capital stock usually has the voting

right?

317. When capital stock is issued for cash, which accounts

are credited?

318. What are the two methods of accounting for stock

issuance costs?

319. What are the two methods of accounting for treasury



106

stock?

320. What is called a cash dividend that is paid out of

contributed capital?

321. What is the difference between an ordinary stock split

and a reverse stock split?

322. Mention three situations in which stock warrants are

issued.

323. What is a debit balance in retained earnings account

called?

324. What does it mean an appropriation of retained

earnings?

325. Why is a balance sheet important?

326. What does liquidity mean?

327. What are the main limitations of a balance sheet?



107

328. Why does a balance sheet omit many items that are of

financial value to the business?

329. Name the general groups of current assets in a

balance sheet.

330. What are the major activities that their related cash

flows are reported in a statement of cash flow?

331. What does an audit report represent about the

financial statements?

332. What is the difference between horizontal and vertical

analysis?

333. Why is an income statement important?

334. What is the problem with the reported earnings in the

income statement?

335. What does matching principle mean?



108

336. What are the elements of an income statement?

337. What are the formats used in preparing the income

statement?

338. Which format of the income statement is more

informative?

339. What are the criteria for classifying an item as

extraordinary?

340. What are three approaches to report other

comprehensive income components?

341. The statement of income (provide) decision-makers

with detailed information about the profit (perform) of a

business.

342. Those who analyze the income statement should

notice that the statement is prepared using methods



109

selected by the management of the (report) entity.

343. (Measure) and reporting net income for the period

requires proper matching of the elements of income

recognized in the period.

344. A (type) income statement shows the performance of

a business in terms of operating and nonoperating (act).

345. The single-step format uses two (broaden)

classifications.

346. A separate category for the gain or loss from

(dispose) of a segment of a business must (provide).

347. The components of other (comprehend) income must

be displayed in one of the three approaches.

348. What is the definition of revenue?

349.What are the two important tasks to which accountants



110

are always faced?

350. Based on a theoretical point of view, when revenue

must be recognized?

351. What are three conditions to be met for revenue

recognition in financial accounting and reporting?

352. Give two exceptions to practical rule of revenue

recognition.

353. The concept of revenue (originate) in ancient times.

354. Each step in the earning process is (essence).

355. Increases in the value of goods and services produced

by the enterprise take place (continue) throughout the

(earn) process.

356. The most (note) example for (recognize) of revenue

before delivery point is long-term construction contract.



111

357. When collection of sales price is not (reason) assured,

revenue can not (recognize).

358. Cite two situations in which accountants encounter

accounting changes.

359. Which opinion of the APB gives guidelines for

accounting changes?

360. What is the cumulative effect of a change in

accounting principles?

361. What are different types of accounting changes?

362. What are different approaches presented by APB

Opinion No. 20 for accounting changes?

363. Give some example of changes in accounting

principles for which \ a retroactive approach must be

applied.



112

364. What are called the two parties involved in a lease

contract?

365. What is a lease agreement?

366. Name some of the advantages of the lease to the

lessee.

367. The lessee classifies leases into two groups. What are

they?

368. When the lessee should capitalized a lease contract?

369. The lessor classifies leases into three types. What are

they?

370. Which types of leases by the lessor involves a dealer's

profit?

371. How do economists define income?

372. What is the accounting definition of income?



113

373. What concept is the Hicksian definition of income

based on?

374. What are the two methods for measuring periodic

income of a business enterprise?

375. Two views affect income measurement. What are

they?

376. Which one of the current operating performance or

all-inclusive income is required in current accounting

practice?

377. What does GAAP stand for?

378. What does GAAP mean?

379. Why does financial accounting and reporting lack a

coherent body of theory?

380. Name some of the early attempts to establish a



114

structure for accounting theory?

381. What does the FASB framework include? . Which

component of the FASB conceptual framework is the most

fundamental?

382. What does the objectives part of the framework focus

on?

383. Which accounting qualities are not solely related to

information? And what are they related to?

384. What qualities accounting information should posses?

385. What are the ingredients of reliability?

386. What are the secondary qualities of accounting

information?

387. Name the four basic assumptions and the four

principles of accounting.



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388. What is the function of managerial accounting?

389. Who are the primary audiences of managerial

reports?

390. What criteria should be followed in preparing

managerial reports?

391. How many functions does management process

involve?

392. What is a budget? And what is a flexible budget?

393. What does a performance report show?

394. What does it mean by management by exceptions?

395. There are two systems for costing products. What are

they?

396. What is a just-in-time production?

397. What are the two main cost accounting systems?



116

398. Which cost accounting system is best for production

of similar goods?

399. Which cost accounting system notices the

customers' specifications?

400. In a manufacturing company, cost accounting systems

help attain two important managerial objectives. What are

they?

401. Which cost accounting system is the most suitable for

printing firms and for companies involved in producing

milk?

402. Job cost sheet is the heart of a job cost system. What

data are recorded on a typica] job cost sheet?

403. What are the equivalent units of production?

404. Name five main sections of a cost of production



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report.

405. What is a joint product? Give an example.

406. What is a by-product? Give an example.

407. What are the methods of allocation commonly used to

assign joint . costs to joint products?

408. There are two approaches for costing by-products.

What are they?

409. What is cost behavior analysis?

410. What does it mean by activity index?

411. What is a relevant range?

412. Define variable and fixed costs?

413. What is a mixed costs or semivariable cost?

414. There are three methods for separating mixed costs

into variable and fixed components. What are they?



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415. How do you define contribution margin?

416. What are the principal break-even analysis methods?

417. What does a margin of safety measure show?

418. Which approaches of costing considers fixed

manufacturing costs as period costs?

419. When several products are produced and sold, how

can a breakeven point be calculated?

420. You should ………… smoking. It’s dangerous to

your health.

a. look up

b. turn up

c. give up

d. pick up

421. She has been trained well. So, she is ... to take the



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job. a. qualified

b. surprised

c. scared

d. suitable

422. He ... in a factory when he was young.

a. used work

b. used to work

c. used working

d. used worked

423. I'm going to ... a reservation on flight 427 to London.

a. compromise

b. travel

c. confirm

d. comprise



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424. The new manager …… the employees very badly.

a. feels

b. tries

c. work

d. treats

425. He took an aspirin to get rid of... pain. a. several

b. many

c. severe

d. significant

426. The atmosphere also ... us against small bits of matter

that speed towards the earth from space.

a. pretends

b. protects

c. presents



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d. prevents

427. The fuel ... of big cars is more than small ones.

a. explosion

b. consumption

c. operation

d. production

428. Cash paid to acquire plant assets, and cash received

from sale of a portfolio of held-to-maturity security are

examples of cash flows from ...

a. operating activities

b. investing activities

c. financing activities

d. none of the above

429. In periods of inflation, which of the following



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methods yields the higher amount of depreciation in the

first year of its application?

a. straight-line

b. declining balance

c. sum-of-the-years digits

d. None

430. If a corporation reacquires its own stock, the stock is

listed on the balance sheet in the ... section.

a. current assets

b. stockholders' equity

c. current liability

d. none of the above

431. In which of the following situations a CPA must

release an adverse opinion, assuming that the level of



123

materiality involved is so material?

a. there is a deviation from GAAP

b. scope of audit is limited by the client

c. the auditor is independent

d. existence of situation implying that the scope of audit is

restricted

432. People may have ... certain words so that the sounds

became

understandable to others.

a. began

b. imagine

c. repeated

d. indicate

433. Our computers are now small enough ... and some are



124

cheap enough to buy.

a. to keep

b. to carry

c. to calculate

d. to use

434. When you move from general to ... you have to give

the rules before the examples.

a. artistic

b. collective

c. economic

d. specific

435. She disagreed with a weekly ... of 10,000 tomans.

a. mark

b. score



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c. wage

d. price

436. The principal of our school works in a ... office.

a. well-organized

b. well-calculated

c. well-decorated

d. well-corrected

437. I am sure that you will succeed because you know the

...

a. valuation

b. procedure

c. appointment

438. An example of a variable cost is ….

a. depreciation



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b. treasurer’s salary

c. insurance on machinery

d. unit material cost

439. The process of writing off intangibles is called ...

a. depletion

b. depreciation

c. amortization

d. appreciation

440. A dividend paid in additional shares as opposed to

cash, is a ...

a. cash dividend

b. stock dividend

c. stock split

d. stock option



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441. Which of the following should not be classified as a

liability?

a. Payroll taxes payable

b. Creditors

c. Accounts payable

d. Deferred charges

442. Goods shipped to dealers on memorandum billing are

termed ...

a. goods in transit

b. goods out on consignment

c. segregated goods

d. None

443. I really enjoyed the story you sent me, but the ending

was very ...



128

a. prediction

b. predicting

c. predictable

d. predicted

444. I couldn't concentrate on my homework, because my

brother kept me ... with silly questions.

a. interrupting

b. interrupted

c. to interrupt

d. interruption

445. I got something for my cough from the chemist's, so

I... go to the doctor's.

a. shouldn't

b. mustn't



129

c. don't have to

d. had to

446. It was decided that the duties of part-timers should be

...

a. declined

b. reduced

c. required

d. devoted

447. Their aunt... them after their mother's death.

a. looked after

b. looked forward

c. looked into

d. looked through

448. He never thinks about anything expect watching TV;



130

he's ... to it.

a. restricted

b. affected

c. represented

d. addicted

449. He was arrested for the…. possession of firearms.

a. unlikely

b. unlawful

c. imperfect

d. ineffective.

450. I'm afraid this vase is anything but antique-in fact, it's

...

a. worthless

b. hopeless



131

c. meaningless

d. pointless

451. "Is attendance important in this class?"

"No, but in the last class it... very seriously."

a. was taking

b. has taken

c. was taken

d. has been taken

452. Why did you change your travel plans?

"I heard that... to Finland in winter is a bad idea."

a. to go

b. if I go

c. I will go

d. to be going



132

453. fought for my country and ... my father before me.

a. so

b. so did

c. not did

d. neither did

454. I've given ... trying to lose weight because if never

seems to work.

a. up

b. back

c. in

d. out

455. It was a small class so the teacher was able to give us

each a lot of ... attention.

a. single



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b. one by one

c. private

d. individual

456. This house is mine. I... it. a. hire

b. own

c. owe

d. hold

457. If you ... that you will do something, you say that you

will ... do it.

a. claim

b. pretend

c. promise

d. complain

458. If you me ... in a situation or activity, you are talking



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part in it.

a. involved

b. injured

c. suited

d. saved

459. Dose the train go all the way to my ….

a. station

b. neighbor

c. departure

d. destination

460. You won't pass your exam … doing a lot more

practice.

a. although

b. unless



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c. except

d. without

461. In order to ... the ... of the court house, the city

allotted a substantial amount for the purpose.

a. augment-remnants

b. revitalize-mendacity

c. designate-apportionment

d. facilitate-renovation

462. Actors are often very ... since they must believe

strongly in their n own worth and talents.

a. tedious

b. egotistic

c. unequivocal

d. personal



136

463. If something requires immediate action or attention, it

is said to be….

a. swift

b. timely

c. urgent

d. prompt

464. The child ... to her mother, so that her father would

not here.

a. whistled

b. wrestled

c. whittled

d. whispered

465. Even though the man hadn't seen it in many years, he

... his son's handwriting.



137

a. recognized

b. recommended

c. reconciled

d. recounted

466. Seeing the murderer kill his victim was a terrible ...

for the child.

a. plague

b. ordeal

c. quest

d. litter

467. When the concert was over, the audiences ...

enthusiastically.

a. applauded

b. advertised



138

c. assembled

d. appreciated

468. He ... that he had been the one to run away from the

fight.

a. refused

b. fulfilled

c. convinced

d. denied

469. The neighbors left their homes ... yesterday.

a. remarkably

b. simultaneously

c. approximately

d. characteristically

470. That young man still denies ... the fire behind the



139

store.

a. to start

b. to be started

c. having started

d. having been started

471. ... that the hope for cancer control may lie in the use

of a vaccine.

a. believing

b. to believe

c. the belief

d. it is believed

472. Tom ... Einstein's theory at one point in his article.

a. alluded to

b. entitled to



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c. substituted for

d. affiliated with

473. The poor man was ... of many things that money

could buy.

a. starved

b. deprived

c. terminated

d. confined

474. "John should have warned you about that." "Yes,

but... he's still my good friend."

a. moreover

b. despite that

c. although

d. on the contrary



141

475. "Is attendance important in this class?"

"No, but in the last class it... very seriously."

a. has taken

b. has been taken

c. was taken

d. was taking

476. "Do you want to go skiing with us?"

"Oh, no! Just... skiing down a mountain terrifies me."

a. the thinking of

b. a thought on

c. about thinking of

d. the thought of

477. "Did you decide to hire Smith for the job?"

"Yes, I chose him because ... not only has the experience



142

but also the education."

a. he does

b. he has

c. he is

d. he

478. "The musicians have been practicing for eight hours."

"Needless..., many of them want to stop soon."

a. to say that

b. to say

c. it's said that

d. saying

479. "What's all the noise about?"

"We had a bad accident... at the factory."

a. happened



143

b. happening

c. happen

d. has happened

480. "Why was the road closed yesterday?"

"There ... a bad accident."

a. must have been

b. has been

c. has to be

d. might be

481. "What's the answer to problem two?"

"I don't know, and even ... I wouldn't tell you."

a. I did

b. Though I did

c. If I did



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d. If I do

482. "When was this school built?"

"I think it was sometime...."

a. 1960's

b. in 1960's

c. at the 1960's

d. in the 1960's

483. "It gets quite cold here in the winter." "Oh dear, I was

hoping ... buy a coat."

a. not to have to

b. I don't have to

c. I wouldn't

d. Not having to

484. "Several languages are spoken in your country, aren't



145

they?"

"Yes, but French is ... in this region." ,

a. dominated

b. the dominating

c. dominated

d. the domination

485. "I really like your new shoes."

"And they cost less than I...."

a. expect

b. was expected

c. had expected

d. am expecting

486. "Do you think the new system will be an

improvement?"



146

"Yes. Costs will decrease,... should increase profits."

a. through which

b. therefore

c. which

d. however

487. 1 .The more we study lasers, ... uses we discover.

a. more

b. most of

c. the more

d. the most

488.A good paragraph must be not only unified and

ordered, .. complete.

a. nor

b. both



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c. or

d. but also

489.am ... to come to the meeting; please apologize for my

absence.

a. unable

b. unaware

c. disliked

d. excused

490.Mrs. Townsend was left to make all the ... for the

picnic by herself.

a. procedures

b. arrangements

c. provisions

d. organizations



148

491.You'd better set off ten minutes early ... there is a lot

of traffic.

a. in case

b. so that

c. as if

d. even if

492. 6. The librarian went to look in the cupboard ... rare

books were kept.

a. that

b. there

c. where

d. which

493.The Home-Loan Company ... the right to cancel this

agreement.



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a. serves

b. deserves

c. conserves

d. reserves

494. It was a complete ...; I never meant to hurt her.

a. guilt

b. crime

c. chance

d. accident

495. Under retroactive approach

a. the financial statements of prior periods are restated

b. no prior period adjustment entry is made

c. no adjustment is made in the beginning balance of

retained earnings



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d. an entry is made for the cumulative effect of the change

496. If it is unclear as to whether an item is a change in

principle or a change in an estimate, it should be treated as

a ....

a. change in principle

b. prior period adjustment

c. retained earnings adjustment

d. change in estimate

497. If a common stockholder does not exercise his

preemptive right to subscribe to new issue of stock ....

a. his share of ownership and control of the new

outstanding shares diminishes

b. his previous fraction of the total number of outstanding

shares is maintained



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c. his previous share of the corporation ownership

increases

d. he will not be entitled to vote at the next stockholders

meeting

498. When a branch is established, the branch manager

opens an account in its general ledger entitled ....

a. branch capital

b. branch investment

c. home office control

d. home office capital

499. The determination of whether a company is

producing products efficiently and effectively is included

in ....

a. performance auditing



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b. compliance auditing

c. financial auditing

d. governmental auditing

500. If one of the operating companies held by the holding

company, becomes insolvent....

a. the holding company is responsible for the payment of

its liabilities

b. the other operating companies will be jointly

responsible for its debts

c. the holding company and other operating companies are

not legally liable for its debts

d. the holding company will not be able to pay its debts

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