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. 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.






2. Percentage of completion and completed contract method allowed.






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






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






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






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






7. 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






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






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






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






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






12. 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.






13. Components of net periodic pension cost are SIRAGE: service cost - interest cost - return on plan assets - amortization of prior service cost - gain/loss amortization - existing net obligation/asset amortization.






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






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






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






17. Enacted tax rate only.






18. 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.






19. Lower of cost or market.






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






21. May not be capitalized.






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






23. 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.






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






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






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






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






28. Cost method or legal (par) method.






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






30. 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






31. 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.






32. 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






33. 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.






34. No requirement for disclosure of key management compensation arrangements.






35. 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.






36. Revaluation is not permitted.






37. 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.






38. 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






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






40. 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






41. No requirement for explicitly stating following US GAAP.






42. Segment profit or loss - assets.






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






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






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






46. 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.






47. 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.






48. 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.






49. 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.






50. No classification