Nama : Alya Ghaitsa Putri

Nim : D42192456
Golongan : Gol D / 15
Applied English

PRACTICE 2
READING COMPREHENSION

A. STARTER
What do the abbreviations mean?
GAAP : GAAP merupakan kependekan dari Generally Accepted Accounting
Principles.

IFRS : International Finacial Report Standard

IAS : International Accounting Standards

IASC. : The International Accounting Standards Committee

B. READING TEXT
International accounting
International companies can choose how they present financial information to
outside parties. The rules and regulations between countries vary significantly.
Accountants worldwide are familiar with the words ‘Generally Accepted Accounting
Principles (GAAP)’. Some of the basic principles are:
1. The going concern principle
2. The prudence principle
3. The matching principle
4. The consistency principle

The development of these principles has greatly differed between countries. For
example, in most English-speaking countries it is often accepted to offset unrealized
 gains from unrealized losses, or two re-value long term assets upwards, provided
sufficient proof of the current value can be shown. This means that accounts can
have very different values, depending on whether the company chooses to follow
local accounting standards, International Financial Reporting Standards (IFRS) –
formely the International Accounting Standards (IAS) – or U.S GAAP. Whether the
company can choose is governed by the laws of the country where it is registered.
For example, the U.S.A and Japan currently allow publicly-traded companies to
prepare their financial statements using the standard of the International Accounting
Standards Committee (IASC), but they must also include a reconciliation to domestic
GAAP.

C. TASK 1
Use words below to make word partnerships. Then match them to the definitions
below.
Outside accepted English-speaking local accounting publicly-traded
Company practice standards parties countries

1. A firm that sells its shares to anyone who wants to buy them.
Answer : Publicly - traded company
2. For example, Australia, the U.K., and the U.S.A.
Answer : English - Speaking countries
3. The way that most people do something
Answer : Accepted Practice
4. The rules and regulations which state how accountants operate in a particular
place.
Answer : local accounting standards
5. People of groups who are not involved with the company.
Answer : outside parties
TASK 2 The article mentions four basic principles of accounting. Match them to the
definitions below.

The Matching Principle

1.
This principls is concerned with the timing of the recognitions of transactions in the
accounts. Items are recorded when the income or expense arises, and are not
dependent on the movements of cash.

The going concern priciple

2. When preparing accounts, one must assume that the enterprise will still be viable in
the years to come. Practically all accounting items are affected by this assumption,
such as the carrying value of fixed asset and inventories, and the ability to repay
debts and other obligations.

3.

The Prudence Principle

What value should be given to the numbers in the accounts? It is normal to act
pessimistically, so that provits and assets are not overstated, and expenses and
liabilities realistically valued.

The Consistency Principle

4. Accounts should be produced using the same principles from one year to the next.
Deviations from this principles must be noted, and the effects on the accounts
shown.
TASK 3. Answer these questions and do all the task that follow!

1. Do you know any differences in the applications of these principles between countries?

Answer : Some of the basic principles are:

1. The principle of survival

2. The precautionary principle

3. The matching principle

4. The principle of consistency

The development of these principles differs greatly from country to country. For
example, in most English-speaking countries, it is often accepted to offset an
unrealized gain from an unrealized loss, or two long-term asset returns upwards,
provided adequate evidence of its present value can be demonstrated. This means
that accounts can have very different values, depending on whether the company
chooses to follow local accounting standards, International Financial Reporting
Standards (IFRS) - formerly International Accounting Standards (IAS) - or US GAAP.

2. What should a visiting accountant know about the principles in your country?

Answer :

Different countries have different accounting principles.

This is adjusted to the needs and other factors that exist in each country. In Indonesia,
accounting principles are regulated by the IAI or the Indonesian Accounting
Association, which is the body that regulates accounting rules and policies in effect in
Indonesia. The accounting principles that guests need to know are as follows.

1 Principles of Economic Entities

2 Principles of the Accounting Period

3 Principles of Historical Cost

4 Principles of Monetary Units

5 Principles of Business Continuity

 6 Principles of Disclosure

7 Principles of Income Recognition

8 Principles of Reconciliation

9 Principles of Consistency

10 Principles of Materiality

3 . Make a summary about the principles in Indonesia and discuss it in a group of two or
three!

Answer :

A. Principles of Economic Entities

Principles of Economic Entities as the concept of a business entity. In other words,

accounting considers that a company is an economic entity that stands alone and is
separate from other economic entities even from private owners.

B. Principles of the Accounting Period

In the principle of the accounting period or the principle of the period of time, the
financial assessment and reporting of a company is limited by a certain period of time.
Suppose a company conducts its business based on an accounting period, from January
1 to December 31.

C. Principle of Historical Cost

This principle requires that every good or service obtained is then recorded based on all
costs incurred in obtaining it.

D. Principles of Monetary Units

In this principle, transaction recording is only stated in the form of currency and without
involving non-qualitative matters. All recording is limited to everything that can be
measured and valued in units of money.

E. Principles of Business Continuity

 This principle assumes that an economic or business entity will run continuously or
continuously without dissolution or termination unless there are certain events that can
prove it.

F. Principle of Full Disclosure

The financial statements must have full disclosure principles in presenting information
that is informative and fully disclosed. And if there is information that cannot be
presented in the financial statements, additional information is given.

G. Income Recognition Principle

Income arises from an increase in assets generated by business activities such as sales,
revenue sharing and others.

H. Principle of Reconciliation

The purpose of the matching principle in accounting is that costs are matched with
revenue received with the aim of determining the size / size of net income for each
period.

I. Principle of Consistency

The principle of consistency is defined as the accounting principles used in financial

reporting and is used consistently (does not change the methods and procedures).

J. Principle of Materiality

Accounting principles have the aim to uniform all rules. However, in reality, not all
accounting applications comply with existing theories, so it is not uncommon for
material disclosures to occur

4. Make a video about your conversation related to the principles in Indonesia and upload it
in YouTube channel!

Submit the link in LMS for not more than 5 PM at 30 March 2021!

Good luck !