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Test your basic knowledge |
U.S. GAAP
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Subject
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business-skills
Instructions:
Answer 50 questions in 15 minutes.
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Match each statement with the correct term.
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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. 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
Nonmonetary Exchanges
Notes to the Financial Statements
Marketable Securities - Available-For-Sale
2. 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).
Capital (Finance) Lease Criteria
Reporting of Deferred Taxes
Subsequent Events
Fixed Asset Depreciation
3. 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.
Accounting for Adjustments in Tax Rates
Comprehensive Income (Presentation)
Determining Functional Currency
Gains and Losses on Pensions
4. Percentage of completion and completed contract method allowed.
Construction Contracts
Revenue Recognition
Accounting for Stock Issued to Employees
Disclosure of Financial Instruments
5. 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
Financial Instruments (Initial Recognition)
Subsequent Events
Fixed Asset Depreciation
6. 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.
Accounting for Income Taxes (Valuation)
Capital (Finance) Lease Criteria
Fixed Asset Impairment
Disclosure of Financial Instruments
7. (Balance sheet - income statement - SOCF) as of the most recent fiscal quarter and as of the end of the preceding fiscal year.
Prior Service Cost
Treasury Stock
Fixed Asset Depreciation
Interim Financial Reporting Requirements
8. Classified as: (1) trading (2) available-for-sale (3) held-to-maturity
Interim Financial Reporting Requirements
Disclosure of Financial Instruments
Marketable Securities - Classification
Marketable Securities - Available-For-Sale
9. Enacted tax rate only.
Contingent Liability
Subsequent Events
Indirect Costs of Lease
Use of Tax Rates
10. Segment profit or loss - assets.
Funded Status of Pension Plan
Comprehensive Income (Revaluation)
Segment Reporting
Interim Financial Reporting Requirements
11. Revaluation is not permitted.
Comprehensive Income (Revaluation)
Accounting Changes
Inventory Valuation
Contingent Liability
12. Remeasurement method must be used when a foreign subsidiary is operating in a highly inflationary environment.
Construction Contracts
Risks and Uncertainties
Fixed Asset Valuation
Foreign Currency Translation
13. Cost method or legal (par) method.
Statement of Cash Flows (Interest and Dividends)
Accounting Changes
Treasury Stock
Determining Functional Currency
14. 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 Deferred Taxes
Use of Tax Rates
Reporting of Remeasurements
15. FASB has not yet issued a pronouncement on convergence with IASB.
Accounting for Income Taxes (Valuation)
Financial Instruments (Initial Recognition)
Use of Tax Rates
Fixed Asset Impairment
16. Lower of cost or market.
Inventory Valuation
Interim Financial Reporting Requirements
Accounting Changes
Reporting of Deferred Taxes
17. May not be capitalized.
Development Costs (R&D)
Gains and Losses on Pensions
Construction Contracts
Intangible Assets
18. 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 : (
Pension Plan Liability
Bond Issue Costs
Capital (Finance) Lease Criteria
Accounting for Income Taxes (Valuation)
19. 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
Fixed Asset Valuation
Convertible Bonds
Comprehensive Income (Presentation)
20. Indirect direct costs paid by the lessee are expensed when incurred.
Bond Discount/Premium Amortization
Statement of Cash Flows (Interest and Dividends)
Indirect Costs of Lease
Use of Tax Rates
21. 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.
Marketable Securities - Available-For-Sale
Determining Functional Currency
Marketable Securities - Classification
Fixed Asset Valuation
22. 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
Change in Accounting Entity
Uncertain Tax Positions
Financial Instruments (Fair Value)
Extraordinary Items
23. Costs before technological feasibility must be expensed - costs after technological feasibility are capitalized.
Consolidation - Parent and Subsidiary with Different Year-Ends
Notes to the Financial Statements
Funded Status of Pension Plan
Computer and Software Development Costs
24. Probable is defined as likely to occur and reasonably possible is defined as more likely than remote - but less than likely.
Construction Contracts
Impairment of Intangible Assets Other Than Goodwill
Contingencies (Probable and Possible Definitions)
Interim Financial Reporting
25. Lessees--operating or capital leases. Lessors--operating - sales-type - or direct financing leases.
Lease Classification
Convertible Bonds
Accounting for Income Taxes (Valuation)
Comprehensive Income (Presentation)
26. 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.
Related Party Transactions
Gains and Losses on Pensions
Subsequent Events
Indirect Costs of Lease
27. 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
Extraordinary Items
Subsequent Events
Funded Status of Pension Plan
Interim Financial Reporting Tax Rates
28. Not required to match consumption. No requirement to review method - life - or salvage value at year end. Can use composite or component depreciation.
Marketable Securities - Available-For-Sale
Fixed Asset Depreciation
Construction Contracts
Intangible Assets
29. 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.
Marketable Securities - Impairment
Risks and Uncertainties
Fixed Asset Valuation
Prior Service Cost
30. 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.
Comprehensive Income (Revaluation)
Pension Plan Cost
Inventory Cost Flow Assumptions
Sale-Leaseback Transactions
31. Components of net periodic pension cost must be aggregated and presented as one amount on the income statement.
Inventory Cost Flow Assumptions
Reporting of Pension Cost
Accounting for Stock Issued to Employees
Investment Property
32. Entities are required to disclose concentrations of credit risk. Market risk disclosures are optional.
Disclosure of Financial Instruments
Revenue Recognition
Fixed Asset Valuation
Interim Financial Reporting Requirements
33. May be presented as a primary financial statement or in the notes of the financial statement.
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34. 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
Statement of Changes in Shareholders' Equity
Related Party Transactions
Financial Instruments (Initial Recognition)
35. Bank overdrafts are excluded from cash and classified as financing cash flows.
Intangible Assets
Statement of Cash Flows (Cash)
Variable Interest Entity
Statement of Changes in Shareholders' Equity
36. 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.
Treasury Stock
Accounting for Adjustments in Tax Rates
Foreign Currency Translation
Risks and Uncertainties
37. No requirement for disclosure of key management compensation arrangements.
Related Party Transactions
Marketable Securities - Available-For-Sale
Computer and Software Development Costs
Financial Instruments (Fair Value)
38. Asset not required to be remeasures - but does get tested for impairment once classified as held-for-sale
Convertible Bonds
Change in Accounting Entity
Discontinued Operations
Interim Financial Reporting Tax Rates
39. Unusual in nature and infrequence in occurrence and material.
Financial Instruments (Fair Value)
Extraordinary Items
Use of Tax Rates
Reporting of Deferred Taxes
40. Valuation allowance is recognized when it is more likely than not that part or all of the deferred tax asset will not be realized.
Contingencies (Probable and Possible Definitions)
Accounting for Income Taxes (Valuation)
Financial Instruments (Initial Recognition)
Revenue Recognition
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.
Change in Accounting Entity
Treasury Stock
Accounting Changes
Construction Contracts
42. Recognition of gains is dependent on the rights of the leased property retained by the seller-lessee.
Sale-Leaseback Transactions
Statement of Cash Flows (Method)
Statement of Cash Flows (Cash)
Convertible Bonds
43. No impracticality exception for error corrections.
Accounting for Income Taxes (Valuation)
Error Correction
Intangible Assets
Risks and Uncertainties
44. 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
Pension Plan Liability
Revenue Recognition
Statement of Cash Flows (Cash)
Convertible Bonds
45. Research and development costs expensed - reported using the cost model only.
Construction Contracts
Notes to the Financial Statements
Marketable Securities - Available-For-Sale
Intangible Assets
46. All adjustments for changes in deferred tax balances due to changes in tax laws or rates are recognized on the income statement.
Use of Tax Rates
Discontinued Operations
Accounting for Adjustments in Tax Rates
Accounting for Income Taxes (Valuation)
47. Interest and dividends received - interest paid and taxes paid are CFO. Dividends paid are classified as CFF.
Risks and Uncertainties
Pension Plan Cost
Statement of Cash Flows (Interest and Dividends)
Error Correction
48. Entities cannot apply the FASB conceptual framework to specific accounting issues
Uncertain Tax Positions
Fixed Asset Depreciation
Goodwill Impairment
Conceptual Framework
49. Enacted tax rate only.
Interim Financial Reporting Tax Rates
Comprehensive Income (Revaluation)
Reporting of Pension Cost
Convertible Bonds
50. 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
Gains and Losses on Pensions
Nonmonetary Exchanges
Bond Issue Costs
Sale-Leaseback Transactions
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