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






2. 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.






3. 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.






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






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






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






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






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






9. Enacted tax rate only.






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






11. 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.






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.






13. 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.






14. 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






15. 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.






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






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






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






19. Percentage of completion and completed contract method allowed.






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






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






22. 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.






23. 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






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






25. 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.






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






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






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






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






31. No classification






32. 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.






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






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






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






36. 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






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






38. 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.






39. 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.






40. Lower of cost or market.






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






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






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






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






45. All gains and losses included in OCI






46. Cost method or legal (par) method.






47. Enacted tax rate only.






48. 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).






49. Slight variation from year-end reporting.






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