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






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






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






4. 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.






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






6. No requirement for explicitly stating following US GAAP.






7. 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.






8. 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






9. 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.






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






11. 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.






12. 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).






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






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






15. 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






16. Projection benefit obligation (PBO) is the defined benefit pension plan liability.






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






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






19. 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.






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






21. 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






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






23. Enacted tax rate only.






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






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. 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






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






28. All gains and losses included in OCI






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






30. May not be capitalized.






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






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






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






34. Slight variation from year-end reporting.






35. No impracticality exception for error corrections.






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






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






38. 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.






39. 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.






40. Lower of cost or market.






41. 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.






42. Enacted tax rate only.






43. 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 : (






44. Revaluation is not permitted.






45. 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.






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






47. 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.






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


49. 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.






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