Test your basic knowledge |

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. Entities cannot apply the FASB conceptual framework to specific accounting issues






2. Revaluation is not permitted.






3. 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






4. 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.






5. All adjustments for changes in deferred tax balances due to changes in tax laws or rates are recognized on the income statement.






6. May be presented as a primary financial statement or in the notes of the financial statement.


7. 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.






8. (Balance sheet - income statement - SOCF) as of the most recent fiscal quarter and as of the end of the preceding fiscal year.






9. Segment profit or loss - assets.






10. 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.






11. No classification






12. Lessees--operating or capital leases. Lessors--operating - sales-type - or direct financing leases.






13. Interest and dividends received - interest paid and taxes paid are CFO. Dividends paid are classified as CFF.






14. 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.






15. Includes disclosure of significant estimates but not judgments made in preparing the financial statements.






16. 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.






17. May not be capitalized.






18. 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 : (






19. Recognized in a two-step process: (1) recognition of the tax benefit (2) measurement of the tax benefit.






20. Unusual in nature and infrequence in occurrence and material.






21. Best method that clearly reflects periodic income. Does not need to have a rational relationship with the physical inventory flow. LFIO is permitted.






22. Considered non-compensatory if they meet certain requirements.






23. 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






24. No impracticality exception for error corrections.






25. When the direct method is used - entities are required to present a reconciliation of net income to net cash flows from operating activities.






26. Single - two - or in statement of changes in owner's equity. Presentation of changes in owner's equity is phasing out completely by 12/15/2012.






27. Research and development costs expensed - reported using the cost model only.






28. Two step test: fair value of reporting unit compared to its carrying value - including goodwill. If fair value is less than carrying value - an impairment loss is calculated by comparing the implied fair value of the reporting unit's goodwill to the






29. 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.






30. Funded status is reported of an overfunded pension plan is reported in full as a noncurrent asset. Underfunded plans are reported as current - non-current - or both.






31. 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.






32. Valuation allowance is recognized when it is more likely than not that part or all of the deferred tax asset will not be realized.






33. Projection benefit obligation (PBO) is the defined benefit pension plan liability.






34. Bank overdrafts are excluded from cash and classified as financing cash flows.






35. 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.






36. Enacted tax rate only.






37. Revenue recognized when realized or realizable and earned. Four criteria must be met for each element of a contract before revenue can be recognized: persuasive evidence of an arrangement exists - delivery has occurred or services have been rendered






38. Characterized as having commercial substance and lacking commercial substance. Commercial substance (accounted for at fair value and all gains are recognized). Lacking commercial substance (gains are only recognized when boot is received). Losses are






39. No separate recognition is given to the conversion feature when convertible bonds are issued. Bonds are recorded in same manner as non-convertible bonds.






40. 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






41. 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.






42. Remeasurement method must be used when a foreign subsidiary is operating in a highly inflationary environment.






43. No requirement for explicitly stating following US GAAP.






44. Asset not required to be remeasures - but does get tested for impairment once classified as held-for-sale






45. Recorded as an asset and amortized using the straight-line method.






46. Indirect direct costs paid by the lessee are expensed when incurred.






47. Enacted tax rate only.






48. Entities are required to disclose concentrations of credit risk. Market risk disclosures are optional.






49. Cost method or legal (par) method.






50. Recognition of gains is dependent on the rights of the leased property retained by the seller-lessee.