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. No requirement for explicitly stating following US GAAP.






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






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






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






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






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






7. 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






8. 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.






9. No impracticality exception for error corrections.






10. 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.






11. No classification






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






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






14. 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.






15. 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.






16. All gains and losses included in OCI






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






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






19. Enacted tax rate only.






20. Remeasurement method must be used when a foreign subsidiary is operating in a highly inflationary environment.






21. May not be capitalized.






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






23. 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.






24. 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






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






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






27. 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






28. Enacted tax rate only.






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






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






31. Cost method or legal (par) method.






32. Revaluation is not permitted.






33. 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






34. 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 : (






35. 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.






36. 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.






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






38. 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.






39. Lower of cost or market.






40. 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






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






42. 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.






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






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






45. 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.






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


47. 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.






48. Percentage of completion and completed contract method allowed.






49. 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






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