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. 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.






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






3. Cost method or legal (par) method.






4. 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






5. 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.






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






7. Slight variation from year-end reporting.






8. 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






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






10. May not be capitalized.






11. 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






12. Segment profit or loss - assets.






13. 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).






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






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






16. 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.






17. 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.






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






19. Lower of cost or market.






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






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






22. Enacted tax rate only.






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


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






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






26. 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.






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






28. Enacted tax rate only.






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






31. 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 : (






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






33. No impracticality exception for error corrections.






34. No requirement for explicitly stating following US GAAP.






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






36. 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.






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. 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






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






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






41. Revaluation is not permitted.






42. Contracts that may be settled in cash or stock are not included in diluted EPS if circumstances indicate that eh contract will be paid in cash.






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






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






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






46. No classification






47. Percentage of completion and completed contract method allowed.






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






49. 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






50. 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.