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






2. Revaluation is not permitted.






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






4. No requirement for explicitly stating following US GAAP.






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






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






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






8. Components of net periodic pension cost must be aggregated and presented as one amount on the income statement.






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






10. Unrecognized prior service cost and unrecognized pension gains and losses are reported in AOCI. The pension benefit asset/liability is equal to the funded status of the pension plan.






11. 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.






12. 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.






13. No impracticality exception for error corrections.






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






15. 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.






16. Not required to match consumption. No requirement to review method - life - or salvage value at year end. Can use composite or component depreciation.






17. All gains and losses included in OCI






18. Classified as: (1) trading (2) available-for-sale (3) held-to-maturity






19. 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.






20. 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.






21. 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.






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






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






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






25. Enacted tax rate only.






26. 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






27. 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).






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


29. Probable is defined as likely to occur and reasonably possible is defined as more likely than remote - but less than likely.






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






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






32. 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






33. 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.






34. FASB has not yet issued a pronouncement on convergence with IASB.






35. 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 : (






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






37. Lower of cost or market.






38. Cost model: historical - accum. depr. = impairment






39. 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.






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






42. 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






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






44. 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.






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






46. 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.






47. Cost method or legal (par) method.






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






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






50. Costs before technological feasibility must be expensed - costs after technological feasibility are capitalized.