diff --git a/tests/bugs/gh_7931_test.py b/tests/bugs/gh_7931_test.py
new file mode 100644
index 00000000..b568c35d
--- /dev/null
+++ b/tests/bugs/gh_7931_test.py
@@ -0,0 +1,49 @@
+#coding:utf-8
+
+"""
+ID:          issue-7931
+ISSUE:       7931
+TITLE:       Incorrect variable usage using UPDATE OR INSERT
+DESCRIPTION:
+NOTES:
+    Confirmed bug on 6.0.0.180.
+    Checked on 6.0.0.186 (intermediate build for commit 305c40a05b1d64c14dbf5f25f36c42c44c6392d9) - all OK.
+"""
+
+import pytest
+from firebird.qa import *
+
+db = db_factory()
+
+test_script = """
+    set list on;
+    set count on;
+    set term ^;
+    create or alter procedure sp_test as begin end
+    ^
+    recreate table test (id integer not null primary key)
+    ^
+    create or alter procedure sp_test(a_id integer) returns (o_result integer) as
+        declare var integer = 1;
+    begin
+        update or insert into test (id) values (1 + 1) matching (id);
+        o_result = var;
+        suspend;
+    end
+    ^
+    select * from sp_test(null)
+    ^
+"""
+
+act = isql_act('db', test_script, substitutions=[ ('[ \t]+', ' '), ])
+
+expected_stdout = """
+    O_RESULT 1
+    Records affected: 1
+"""
+
+@pytest.mark.version('>=3.0')
+def test_1(act: Action):
+    act.expected_stdout = expected_stdout
+    act.execute(combine_output = True)
+    assert act.clean_stdout == act.clean_expected_stdout