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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. Entities cannot apply the FASB conceptual framework to specific accounting issues
Consolidation - Parent and Subsidiary with Different Year-Ends
Extraordinary Items
Conceptual Framework
Uncertain Tax Positions
2. Interest and dividends received - interest paid and taxes paid are CFO. Dividends paid are classified as CFF.
Determining Functional Currency
Sale-Leaseback Transactions
Notes to the Financial Statements
Statement of Cash Flows (Interest and Dividends)
3. 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.
Pension Plan Cost
Convertible Bonds
Segment Reporting
Statement of Changes in Shareholders' Equity
4. Asset not required to be remeasures - but does get tested for impairment once classified as held-for-sale
Statement of Cash Flows (Cash)
Interim Financial Reporting Requirements
Inventory Cost Flow Assumptions
Discontinued Operations
5. 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
Contingent Liability
Sale-Leaseback Transactions
Treasury Stock
Accounting for Adjustments in Tax Rates
6. 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
Nonmonetary Exchanges
Marketable Securities - Classification
Marketable Securities - Available-For-Sale
Pension Plan Liability
7. Indirect direct costs paid by the lessee are expensed when incurred.
Extraordinary Items
Indirect Costs of Lease
Segment Reporting
Change in Accounting Entity
8. Bank overdrafts are excluded from cash and classified as financing cash flows.
Intangible Assets
Capital (Finance) Lease Criteria
Accounting Changes
Statement of Cash Flows (Cash)
9. 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
Variable Interest Entity
Accounting for Stock Issued to Employees
Investment Property
Contingent Liability
10. 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.
Determining Functional Currency
Accounting Changes
Statement of Changes in Shareholders' Equity
Marketable Securities - Impairment
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.
Lease Classification
Reporting of Pension Cost
Convertible Bonds
Contingencies (Probable and Possible Definitions)
12. 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.
Inventory Cost Flow Assumptions
Funded Status of Pension Plan
Extraordinary Items
Notes to the Financial Statements
13. Unusual in nature and infrequence in occurrence and material.
Extraordinary Items
Interim Financial Reporting Requirements
Determining Functional Currency
Contingent Liability
14. Classified as: (1) trading (2) available-for-sale (3) held-to-maturity
Notes to the Financial Statements
Marketable Securities - Classification
Uncertain Tax Positions
Extraordinary Items
15. Lessees--operating or capital leases. Lessors--operating - sales-type - or direct financing leases.
Lease Classification
Reporting of Deferred Taxes
Change in Accounting Entity
Investment Property
16. Probable is defined as likely to occur and reasonably possible is defined as more likely than remote - but less than likely.
Financial Instruments (Fair Value)
Contingencies (Probable and Possible Definitions)
Marketable Securities - Impairment
Comprehensive Income (Presentation)
17. No requirement for explicitly stating following US GAAP.
Notes to the Financial Statements
Pension Plan Cost
Statement of Cash Flows (Cash)
Intangible Assets
18. Cost model: historical - accum. depr. = impairment
Nonmonetary Exchanges
Revenue Recognition
Fixed Asset Valuation
Interim Financial Reporting Tax Rates
19. When the direct method is used - entities are required to present a reconciliation of net income to net cash flows from operating activities.
Statement of Cash Flows (Method)
Gains and Losses on Pensions
Convertible Bonds
Fixed Asset Depreciation
20. 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
Financial Instruments (Fair Value)
Funded Status of Pension Plan
Inventory Valuation
Error Correction
21. Research and development costs expensed - reported using the cost model only.
Sale-Leaseback Transactions
Development Costs (R&D)
Statement of Cash Flows (Cash)
Intangible Assets
22. May not be capitalized.
Development Costs (R&D)
Nonmonetary Exchanges
Statement of Cash Flows (Interest and Dividends)
Gains and Losses on Pensions
23. 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
Accounting for Income Taxes (Valuation)
Impairment of Intangible Assets Other Than Goodwill
Comprehensive Income (Presentation)
Investment Property
24. 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 : (
Notes to the Financial Statements
Marketable Securities - Available-For-Sale
Capital (Finance) Lease Criteria
Development Costs (R&D)
25. Entities are required to disclose concentrations of credit risk. Market risk disclosures are optional.
Goodwill Impairment
Disclosure of Financial Instruments
Marketable Securities - Classification
Accounting Changes
26. May be presented as a primary financial statement or in the notes of the financial statement.
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27. All gains and losses included in OCI
Reporting of Remeasurements
Lease Classification
Convertible Bonds
Marketable Securities - Available-For-Sale
28. Recognition of gains is dependent on the rights of the leased property retained by the seller-lessee.
Accounting for Adjustments in Tax Rates
Sale-Leaseback Transactions
Variable Interest Entity
Development Costs (R&D)
29. 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
Convertible Bonds
Revenue Recognition
Goodwill Impairment
Subsequent Events
30. 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.
Gains and Losses on Pensions
Extraordinary Items
Interim Financial Reporting
Contingencies (Probable and Possible Definitions)
31. 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.
Accounting for Stock Issued to Employees
Determining Functional Currency
Uncertain Tax Positions
Interim Financial Reporting
32. No classification
Reporting of Pension Cost
Marketable Securities - Available-For-Sale
Reporting of Deferred Taxes
Investment Property
33. 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.
Change in Accounting Entity
Revenue Recognition
Diluted EPS
Reporting of Deferred Taxes
34. Not required to match consumption. No requirement to review method - life - or salvage value at year end. Can use composite or component depreciation.
Conceptual Framework
Fixed Asset Depreciation
Uncertain Tax Positions
Disclosure of Financial Instruments
35. Lower of cost or market.
Intangible Assets
Inventory Valuation
Marketable Securities - Classification
Conceptual Framework
36. Cost method or legal (par) method.
Convertible Bonds
Contingent Liability
Accounting for Income Taxes (Valuation)
Treasury Stock
37. Enacted tax rate only.
Revenue Recognition
Use of Tax Rates
Error Correction
Funded Status of Pension Plan
38. Revaluation is not permitted.
Investment Property
Interim Financial Reporting Requirements
Determining Functional Currency
Comprehensive Income (Revaluation)
39. Slight variation from year-end reporting.
Pension Plan Cost
Inventory Valuation
Capital (Finance) Lease Criteria
Interim Financial Reporting
40. 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.
Notes to the Financial Statements
Statement of Cash Flows (Interest and Dividends)
Prior Service Cost
Discontinued Operations
41. 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.
Comprehensive Income (Revaluation)
Change in Accounting Entity
Interim Financial Reporting Tax Rates
Marketable Securities - Impairment
42. Percentage of completion and completed contract method allowed.
Construction Contracts
Uncertain Tax Positions
Computer and Software Development Costs
Discontinued Operations
43. Costs before technological feasibility must be expensed - costs after technological feasibility are capitalized.
Construction Contracts
Variable Interest Entity
Computer and Software Development Costs
Nonmonetary Exchanges
44. 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.
Gains and Losses on Pensions
Reporting of Remeasurements
Inventory Cost Flow Assumptions
Goodwill Impairment
45. Projection benefit obligation (PBO) is the defined benefit pension plan liability.
Pension Plan Liability
Funded Status of Pension Plan
Fixed Asset Impairment
Contingent Liability
46. 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
Subsequent Events
Comprehensive Income (Revaluation)
Risks and Uncertainties
Pension Plan Cost
47. No impracticality exception for error corrections.
Fixed Asset Valuation
Error Correction
Reporting of Pension Cost
Revenue Recognition
48. All adjustments for changes in deferred tax balances due to changes in tax laws or rates are recognized on the income statement.
Fixed Asset Valuation
Foreign Currency Translation
Accounting for Adjustments in Tax Rates
Uncertain Tax Positions
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.
Bond Discount/Premium Amortization
Financial Instruments (Initial Recognition)
Accounting for Income Taxes (Valuation)
Comprehensive Income (Revaluation)
50. 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.
Risks and Uncertainties
Variable Interest Entity
Impairment of Intangible Assets Other Than Goodwill
Computer and Software Development Costs