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Test your basic knowledge |
U.S. GAAP
Start Test
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Subject
:
business-skills
Instructions:
Answer 50 questions in 15 minutes.
If you are not ready to take this test, you can
study here
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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. No requirement for explicitly stating following US GAAP.
Notes to the Financial Statements
Foreign Currency Translation
Consolidation - Parent and Subsidiary with Different Year-Ends
Pension Plan Cost
2. 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
Conceptual Framework
Variable Interest Entity
Statement of Cash Flows (Method)
Goodwill Impairment
3. 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 Adjustments in Tax Rates
Determining Functional Currency
Subsequent Events
Prior Service Cost
4. 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
Contingencies (Probable and Possible Definitions)
Marketable Securities - Available-For-Sale
Variable Interest Entity
Discontinued Operations
5. Best method that clearly reflects periodic income. Does not need to have a rational relationship with the physical inventory flow. LFIO is permitted.
Uncertain Tax Positions
Inventory Cost Flow Assumptions
Capital (Finance) Lease Criteria
Risks and Uncertainties
6. 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.
Gains and Losses on Pensions
Accounting Changes
Disclosure of Financial Instruments
Variable Interest Entity
7. 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)
Subsequent Events
Uncertain Tax Positions
Contingencies (Probable and Possible Definitions)
8. No impracticality exception for error corrections.
Intangible Assets
Error Correction
Development Costs (R&D)
Fixed Asset Impairment
9. Segment profit or loss - assets.
Bond Discount/Premium Amortization
Segment Reporting
Lease Classification
Interim Financial Reporting Requirements
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.
Consolidation - Parent and Subsidiary with Different Year-Ends
Inventory Valuation
Notes to the Financial Statements
Sale-Leaseback Transactions
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
Accounting for Stock Issued to Employees
Interim Financial Reporting Tax Rates
Funded Status of Pension Plan
Impairment of Intangible Assets Other Than Goodwill
12. Lessees--operating or capital leases. Lessors--operating - sales-type - or direct financing leases.
Development Costs (R&D)
Lease Classification
Accounting for Adjustments in Tax Rates
Diluted EPS
13. Not required to match consumption. No requirement to review method - life - or salvage value at year end. Can use composite or component depreciation.
Fixed Asset Depreciation
Nonmonetary Exchanges
Contingent Liability
Computer and Software Development Costs
14. Bank overdrafts are excluded from cash and classified as financing cash flows.
Statement of Cash Flows (Cash)
Pension Plan Liability
Discontinued Operations
Diluted EPS
15. Unusual in nature and infrequence in occurrence and material.
Disclosure of Financial Instruments
Extraordinary Items
Segment Reporting
Interim Financial Reporting
16. Interest and dividends received - interest paid and taxes paid are CFO. Dividends paid are classified as CFF.
Statement of Cash Flows (Method)
Intangible Assets
Fixed Asset Valuation
Statement of Cash Flows (Interest and Dividends)
17. Recorded as an asset and amortized using the straight-line method.
Bond Issue Costs
Reporting of Deferred Taxes
Risks and Uncertainties
Segment Reporting
18. No requirement for disclosure of key management compensation arrangements.
Fixed Asset Valuation
Treasury Stock
Related Party Transactions
Foreign Currency Translation
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.
Disclosure of Financial Instruments
Contingent Liability
Inventory Cost Flow Assumptions
Fixed Asset Impairment
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.
Gains and Losses on Pensions
Marketable Securities - Impairment
Interim Financial Reporting Tax Rates
Comprehensive Income (Revaluation)
21. Enacted tax rate only.
Use of Tax Rates
Determining Functional Currency
Accounting for Income Taxes (Valuation)
Sale-Leaseback Transactions
22. 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
Treasury Stock
Contingencies (Probable and Possible Definitions)
Indirect Costs of Lease
Revenue Recognition
23. Valuation allowance is recognized when it is more likely than not that part or all of the deferred tax asset will not be realized.
Inventory Valuation
Statement of Cash Flows (Cash)
Accounting for Income Taxes (Valuation)
Comprehensive Income (Presentation)
24. Cost model: historical - accum. depr. = impairment
Fixed Asset Impairment
Change in Accounting Entity
Foreign Currency Translation
Fixed Asset Valuation
25. 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.
Determining Functional Currency
Diluted EPS
Marketable Securities - Classification
Conceptual Framework
26. 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.
Computer and Software Development Costs
Gains and Losses on Pensions
Reporting of Remeasurements
Subsequent Events
27. Research and development costs expensed - reported using the cost model only.
Intangible Assets
Change in Accounting Entity
Statement of Cash Flows (Cash)
Inventory Valuation
28. No separate recognition is given to the conversion feature when convertible bonds are issued. Bonds are recorded in same manner as non-convertible bonds.
Discontinued Operations
Convertible Bonds
Statement of Cash Flows (Interest and Dividends)
Subsequent Events
29. 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
Foreign Currency Translation
Accounting for Income Taxes (Valuation)
Financial Instruments (Fair Value)
Pension Plan Liability
30. Entities cannot apply the FASB conceptual framework to specific accounting issues
Funded Status of Pension Plan
Conceptual Framework
Inventory Cost Flow Assumptions
Extraordinary Items
31. Percentage of completion and completed contract method allowed.
Marketable Securities - Available-For-Sale
Construction Contracts
Marketable Securities - Classification
Gains and Losses on Pensions
32. 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
Error Correction
Intangible Assets
Conceptual Framework
Nonmonetary Exchanges
33. Remeasurement method must be used when a foreign subsidiary is operating in a highly inflationary environment.
Foreign Currency Translation
Impairment of Intangible Assets Other Than Goodwill
Extraordinary Items
Contingent Liability
34. 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.
Statement of Changes in Shareholders' Equity
Comprehensive Income (Revaluation)
Notes to the Financial Statements
Marketable Securities - Impairment
35. Entities are required to disclose concentrations of credit risk. Market risk disclosures are optional.
Fixed Asset Impairment
Disclosure of Financial Instruments
Investment Property
Bond Issue Costs
36. Projection benefit obligation (PBO) is the defined benefit pension plan liability.
Accounting for Adjustments in Tax Rates
Pension Plan Liability
Extraordinary Items
Statement of Cash Flows (Method)
37. Costs before technological feasibility must be expensed - costs after technological feasibility are capitalized.
Consolidation - Parent and Subsidiary with Different Year-Ends
Computer and Software Development Costs
Accounting Changes
Uncertain Tax Positions
38. Lower of cost or market.
Risks and Uncertainties
Interim Financial Reporting
Fixed Asset Impairment
Inventory Valuation
39. May be presented as a primary financial statement or in the notes of the financial statement.
40. 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
Indirect Costs of Lease
Contingencies (Probable and Possible Definitions)
Contingent Liability
Impairment of Intangible Assets Other Than Goodwill
41. (Balance sheet - income statement - SOCF) as of the most recent fiscal quarter and as of the end of the preceding fiscal year.
Marketable Securities - Available-For-Sale
Interim Financial Reporting Requirements
Notes to the Financial Statements
Capital (Finance) Lease Criteria
42. Revaluation is not permitted.
Statement of Cash Flows (Method)
Extraordinary Items
Financial Instruments (Fair Value)
Comprehensive Income (Revaluation)
43. 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).
Reporting of Deferred Taxes
Uncertain Tax Positions
Marketable Securities - Classification
Statement of Cash Flows (Interest and Dividends)
44. Includes disclosure of significant estimates but not judgments made in preparing the financial statements.
Lease Classification
Capital (Finance) Lease Criteria
Inventory Valuation
Notes to the Financial Statements
45. Indirect direct costs paid by the lessee are expensed when incurred.
Impairment of Intangible Assets Other Than Goodwill
Indirect Costs of Lease
Gains and Losses on Pensions
Fixed Asset Impairment
46. 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.
Gains and Losses on Pensions
Convertible Bonds
Change in Accounting Entity
Reporting of Pension Cost
47. FASB has not yet issued a pronouncement on convergence with IASB.
Fixed Asset Valuation
Statement of Cash Flows (Method)
Construction Contracts
Financial Instruments (Initial Recognition)
48. Recognized in a two-step process: (1) recognition of the tax benefit (2) measurement of the tax benefit.
Fixed Asset Valuation
Risks and Uncertainties
Marketable Securities - Classification
Uncertain Tax Positions
49. Classified as: (1) trading (2) available-for-sale (3) held-to-maturity
Interim Financial Reporting
Discontinued Operations
Marketable Securities - Classification
Bond Discount/Premium Amortization
50. 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.
Intangible Assets
Pension Plan Cost
Reporting of Remeasurements
Marketable Securities - Impairment