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Test your basic knowledge |
U.S. GAAP
Start Test
Study First
Subject
:
business-skills
Instructions:
Answer 50 questions in 15 minutes.
If you are not ready to take this test, you can
study here
.
Match each statement with the correct term.
Don't refresh. All questions and answers are randomly picked and ordered every time you load a test.
This is a study tool. The 3 wrong answers for each question are randomly chosen from answers to other questions. So, you might find at times the answers obvious, but you will see it re-enforces your understanding as you take the test each time.
1. Probable is defined as likely to occur and reasonably possible is defined as more likely than remote - but less than likely.
Goodwill Impairment
Contingencies (Probable and Possible Definitions)
Capital (Finance) Lease Criteria
Marketable Securities - Classification
2. Must disclose nature of operations - use of estimates - estimate of a change in estimate - vulnerability of the risk f near-term severe impact from a material concentration.
Statement of Cash Flows (Interest and Dividends)
Related Party Transactions
Risks and Uncertainties
Development Costs (R&D)
3. Entities may elect the fair value option for recognized financial assets and financial liabilities. You cannot elect fair value on these: (1) VIE that is required to be consolidated (2) pension plan assets/liabilities (3) leased financial assets/liab
Pension Plan Liability
Marketable Securities - Available-For-Sale
Fixed Asset Impairment
Financial Instruments (Fair Value)
4. Either does not have equity investors with voting rights or lacks sufficient financial resources to support its activities. Primary beneficiary must consolidate the VIE. The primary beneficiary is the entity that has the power to direct the activitie
Computer and Software Development Costs
Financial Instruments (Fair Value)
Variable Interest Entity
Inventory Valuation
5. Lower of cost or market.
Error Correction
Conceptual Framework
Discontinued Operations
Inventory Valuation
6. If year-end differs by three months or less - parent can use the subsidiary's regular financial statements of a different period - but they must be significantly disclosed.
Segment Reporting
Consolidation - Parent and Subsidiary with Different Year-Ends
Statement of Cash Flows (Cash)
Interim Financial Reporting Tax Rates
7. Recorded as an asset and amortized using the straight-line method.
Gains and Losses on Pensions
Bond Issue Costs
Interim Financial Reporting
Computer and Software Development Costs
8. Impairment losses recognized in income statement and cost basis is reduced. If held-to-maturity - subsequent changes are not recognized. If available-for-sale - subsequent income is included in OCI.
Treasury Stock
Bond Discount/Premium Amortization
Comprehensive Income (Presentation)
Marketable Securities - Impairment
9. Entities are required to disclose concentrations of credit risk. Market risk disclosures are optional.
Pension Plan Liability
Disclosure of Financial Instruments
Variable Interest Entity
Investment Property
10. Existing condition - situation - or set of circumstances involving varying degrees of uncertainty that may result in the decrease in an asset or the incurrence of a liability. A provision for a loss contingency should be accrued with a charge to inco
Bond Issue Costs
Pension Plan Cost
Contingent Liability
Revenue Recognition
11. If year of change - all previous financial statements that are presented in comparative format along with the current year are to be restated to reflect the information for the new reporting entity.
Contingent Liability
Reporting of Remeasurements
Uncertain Tax Positions
Change in Accounting Entity
12. Slight variation from year-end reporting.
Diluted EPS
Extraordinary Items
Goodwill Impairment
Interim Financial Reporting
13. Cost method or legal (par) method.
Reporting of Remeasurements
Treasury Stock
Capital (Finance) Lease Criteria
Determining Functional Currency
14. All gains and losses included in OCI
Notes to the Financial Statements
Marketable Securities - Available-For-Sale
Investment Property
Segment Reporting
15. Best method that clearly reflects periodic income. Does not need to have a rational relationship with the physical inventory flow. LFIO is permitted.
Change in Accounting Entity
Lease Classification
Inventory Cost Flow Assumptions
Impairment of Intangible Assets Other Than Goodwill
16. Includes disclosure of significant estimates but not judgments made in preparing the financial statements.
Notes to the Financial Statements
Marketable Securities - Impairment
Goodwill Impairment
Fixed Asset Depreciation
17. Functional currency is the currency of the entity's primary economic environment. Local currency is functional currency when foreign operations are relatively self-contained within that country.
Determining Functional Currency
Reporting of Pension Cost
Funded Status of Pension Plan
Gains and Losses on Pensions
18. Two Step Test: (1) test for recovery: compare carrying value to undiscounted future cash flows (2) calculate impairment: difference between carrying value and fair value. Reversal of impairment losses is only permitted for assets held for sale.
Fixed Asset Impairment
Capital (Finance) Lease Criteria
Comprehensive Income (Presentation)
Prior Service Cost
19. No separate recognition is given to the conversion feature when convertible bonds are issued. Bonds are recorded in same manner as non-convertible bonds.
Variable Interest Entity
Marketable Securities - Available-For-Sale
Convertible Bonds
Investment Property
20. Prior service cost increase the PBO and other comprehensive income in the period incurred and is then amortized to pension expense over the plan participant's remaining years of service.
Bond Discount/Premium Amortization
Prior Service Cost
Comprehensive Income (Presentation)
Segment Reporting
21. Finite life intangibles - two step process: compare carrying amount to undiscounted cash flows - then if carrying amount exceeds cash flows - impairment amount is the difference between carrying amount and fair value of asset. For indefinite life - c
Risks and Uncertainties
Investment Property
Uncertain Tax Positions
Impairment of Intangible Assets Other Than Goodwill
22. Interest and dividends received - interest paid and taxes paid are CFO. Dividends paid are classified as CFF.
Fixed Asset Impairment
Inventory Cost Flow Assumptions
Gains and Losses on Pensions
Statement of Cash Flows (Interest and Dividends)
23. No requirement for disclosure of key management compensation arrangements.
Financial Instruments (Fair Value)
Nonmonetary Exchanges
Related Party Transactions
Reporting of Remeasurements
24. Revaluation is not permitted.
Nonmonetary Exchanges
Accounting for Income Taxes (Valuation)
Use of Tax Rates
Comprehensive Income (Revaluation)
25. Components of net periodic pension cost must be aggregated and presented as one amount on the income statement.
Convertible Bonds
Lease Classification
Related Party Transactions
Reporting of Pension Cost
26. Effective interest method is required - unless the straight-line method is not materially different from the effective interest method. Amortization is done over the contractual life of the bond.
Development Costs (R&D)
Notes to the Financial Statements
Diluted EPS
Bond Discount/Premium Amortization
27. Enacted tax rate only.
Consolidation - Parent and Subsidiary with Different Year-Ends
Extraordinary Items
Segment Reporting
Interim Financial Reporting Tax Rates
28. Bank overdrafts are excluded from cash and classified as financing cash flows.
Nonmonetary Exchanges
Statement of Cash Flows (Cash)
Fixed Asset Depreciation
Related Party Transactions
29. May not be capitalized.
Investment Property
Marketable Securities - Classification
Funded Status of Pension Plan
Development Costs (R&D)
30. No classification
Reporting of Remeasurements
Interim Financial Reporting Tax Rates
Investment Property
Fixed Asset Impairment
31. Should be classified as current or non-current based on the classification of the related asset or liability. If no asset/liability - timing of the reversal is used. All assets/liabilities must be netted (one net current and one net non-current).
Reporting of Deferred Taxes
Bond Discount/Premium Amortization
Marketable Securities - Classification
Accounting for Income Taxes (Valuation)
32. Segment profit or loss - assets.
Accounting for Stock Issued to Employees
Segment Reporting
Statement of Cash Flows (Cash)
Comprehensive Income (Revaluation)
33. Valuation allowance is recognized when it is more likely than not that part or all of the deferred tax asset will not be realized.
Contingent Liability
Financial Instruments (Initial Recognition)
Interim Financial Reporting Tax Rates
Accounting for Income Taxes (Valuation)
34. Recognition of gains is dependent on the rights of the leased property retained by the seller-lessee.
Sale-Leaseback Transactions
Reporting of Deferred Taxes
Bond Discount/Premium Amortization
Foreign Currency Translation
35. Not required to match consumption. No requirement to review method - life - or salvage value at year end. Can use composite or component depreciation.
Interim Financial Reporting Tax Rates
Accounting for Stock Issued to Employees
Fixed Asset Depreciation
Pension Plan Liability
36. May be presented as a primary financial statement or in the notes of the financial statement.
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37. Remeasurement method must be used when a foreign subsidiary is operating in a highly inflationary environment.
Gains and Losses on Pensions
Consolidation - Parent and Subsidiary with Different Year-Ends
Foreign Currency Translation
Change in Accounting Entity
38. Projection benefit obligation (PBO) is the defined benefit pension plan liability.
Financial Instruments (Initial Recognition)
Extraordinary Items
Pension Plan Liability
Disclosure of Financial Instruments
39. Entities have two choices when accounting for gains and losses: (1) recognize on the income statement in period incurred (2) recognize in OCI in the period incurred and then amortize to pension expense using the corridor approach.
Comprehensive Income (Presentation)
Gains and Losses on Pensions
Inventory Valuation
Bond Discount/Premium Amortization
40. Recognized in a two-step process: (1) recognition of the tax benefit (2) measurement of the tax benefit.
Uncertain Tax Positions
Development Costs (R&D)
Marketable Securities - Impairment
Marketable Securities - Classification
41. FASB has not yet issued a pronouncement on convergence with IASB.
Pension Plan Liability
Financial Instruments (Initial Recognition)
Inventory Cost Flow Assumptions
Statement of Cash Flows (Cash)
42. Comparative financial statements not required. SEC requires comparative financial statements (2 B/S - 3 other). Cumulative effect is an adjustment to beginning retained earnings to the earliest prior period presented.
Fixed Asset Impairment
Interim Financial Reporting
Accounting Changes
Inventory Valuation
43. Research and development costs expensed - reported using the cost model only.
Intangible Assets
Conceptual Framework
Interim Financial Reporting
Convertible Bonds
44. Unusual in nature and infrequence in occurrence and material.
Risks and Uncertainties
Statement of Cash Flows (Interest and Dividends)
Comprehensive Income (Presentation)
Extraordinary Items
45. For lessee - at least one of four met: (1) ownership transfer (2) written BPO (3) FV of leased property at least 90% of lease payments (4) lease term at least 75% of asset's life. Lessor: sales or direct financing if one of above criteria met and : (
Related Party Transactions
Capital (Finance) Lease Criteria
Development Costs (R&D)
Marketable Securities - Classification
46. Indirect direct costs paid by the lessee are expensed when incurred.
Prior Service Cost
Inventory Valuation
Indirect Costs of Lease
Capital (Finance) Lease Criteria
47. The subsequent event evaluation period extends through the date that the financial statements are issued (public companies) or the date that the financial statements are available to be issued (all other entities). Subsequent events are classified as
Fixed Asset Impairment
Subsequent Events
Statement of Changes in Shareholders' Equity
Interim Financial Reporting
48. Percentage of completion and completed contract method allowed.
Disclosure of Financial Instruments
Pension Plan Liability
Construction Contracts
Statement of Cash Flows (Cash)
49. Enacted tax rate only.
Use of Tax Rates
Intangible Assets
Development Costs (R&D)
Change in Accounting Entity
50. (Balance sheet - income statement - SOCF) as of the most recent fiscal quarter and as of the end of the preceding fiscal year.
Inventory Valuation
Variable Interest Entity
Convertible Bonds
Interim Financial Reporting Requirements