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Test your basic knowledge |
U.S. GAAP
Start Test
Study First
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. Valuation allowance is recognized when it is more likely than not that part or all of the deferred tax asset will not be realized.
Uncertain Tax Positions
Fixed Asset Depreciation
Accounting for Income Taxes (Valuation)
Convertible Bonds
2. Lower of cost or market.
Development Costs (R&D)
Inventory Valuation
Funded Status of Pension Plan
Computer and Software Development Costs
3. May be presented as a primary financial statement or in the notes of the financial statement.
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4. 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.
Investment Property
Pension Plan Cost
Contingent Liability
Variable Interest Entity
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
Accounting Changes
Computer and Software Development Costs
Variable Interest Entity
Comprehensive Income (Presentation)
6. 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
Notes to the Financial Statements
Extraordinary Items
Nonmonetary Exchanges
Contingencies (Probable and Possible Definitions)
7. Enacted tax rate only.
Interim Financial Reporting Requirements
Gains and Losses on Pensions
Contingent Liability
Interim Financial Reporting Tax Rates
8. FASB has not yet issued a pronouncement on convergence with IASB.
Lease Classification
Disclosure of Financial Instruments
Reporting of Pension Cost
Financial Instruments (Initial Recognition)
9. 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.
Inventory Valuation
Change in Accounting Entity
Reporting of Remeasurements
Development Costs (R&D)
10. May not be capitalized.
Financial Instruments (Fair Value)
Development Costs (R&D)
Marketable Securities - Available-For-Sale
Comprehensive Income (Revaluation)
11. 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.
Inventory Cost Flow Assumptions
Diluted EPS
Error Correction
Related Party Transactions
12. Entities are required to disclose concentrations of credit risk. Market risk disclosures are optional.
Disclosure of Financial Instruments
Indirect Costs of Lease
Notes to the Financial Statements
Consolidation - Parent and Subsidiary with Different Year-Ends
13. Entities cannot apply the FASB conceptual framework to specific accounting issues
Uncertain Tax Positions
Conceptual Framework
Investment Property
Fixed Asset Impairment
14. Remeasurement method must be used when a foreign subsidiary is operating in a highly inflationary environment.
Bond Discount/Premium Amortization
Impairment of Intangible Assets Other Than Goodwill
Foreign Currency Translation
Disclosure of Financial Instruments
15. Slight variation from year-end reporting.
Consolidation - Parent and Subsidiary with Different Year-Ends
Diluted EPS
Prior Service Cost
Interim Financial Reporting
16. Research and development costs expensed - reported using the cost model only.
Intangible Assets
Accounting for Stock Issued to Employees
Accounting Changes
Use of Tax Rates
17. When the direct method is used - entities are required to present a reconciliation of net income to net cash flows from operating activities.
Uncertain Tax Positions
Interim Financial Reporting
Reporting of Pension Cost
Statement of Cash Flows (Method)
18. 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
Extraordinary Items
Goodwill Impairment
Interim Financial Reporting
19. Recognition of gains is dependent on the rights of the leased property retained by the seller-lessee.
Comprehensive Income (Presentation)
Discontinued Operations
Sale-Leaseback Transactions
Statement of Cash Flows (Interest and Dividends)
20. All adjustments for changes in deferred tax balances due to changes in tax laws or rates are recognized on the income statement.
Accounting for Adjustments in Tax Rates
Discontinued Operations
Fixed Asset Valuation
Reporting of Deferred Taxes
21. No requirement for explicitly stating following US GAAP.
Intangible Assets
Fixed Asset Valuation
Notes to the Financial Statements
Accounting for Income Taxes (Valuation)
22. 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
Pension Plan Cost
Contingent Liability
Marketable Securities - Classification
Uncertain Tax Positions
23. 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.
Variable Interest Entity
Prior Service Cost
Inventory Cost Flow Assumptions
Marketable Securities - Impairment
24. 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.
Accounting Changes
Lease Classification
Marketable Securities - Classification
Construction Contracts
25. (Balance sheet - income statement - SOCF) as of the most recent fiscal quarter and as of the end of the preceding fiscal year.
Conceptual Framework
Interim Financial Reporting Requirements
Goodwill Impairment
Marketable Securities - Classification
26. Components of net periodic pension cost must be aggregated and presented as one amount on the income statement.
Reporting of Pension Cost
Risks and Uncertainties
Inventory Cost Flow Assumptions
Interim Financial Reporting Tax Rates
27. Cost method or legal (par) method.
Intangible Assets
Treasury Stock
Pension Plan Liability
Statement of Cash Flows (Interest and Dividends)
28. Percentage of completion and completed contract method allowed.
Reporting of Remeasurements
Construction Contracts
Nonmonetary Exchanges
Comprehensive Income (Presentation)
29. Projection benefit obligation (PBO) is the defined benefit pension plan liability.
Reporting of Deferred Taxes
Pension Plan Liability
Computer and Software Development Costs
Sale-Leaseback Transactions
30. 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
Accounting Changes
Computer and Software Development Costs
Conceptual Framework
Revenue Recognition
31. 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.
Comprehensive Income (Presentation)
Fixed Asset Valuation
Indirect Costs of Lease
Bond Discount/Premium Amortization
32. Considered non-compensatory if they meet certain requirements.
Related Party Transactions
Uncertain Tax Positions
Accounting for Stock Issued to Employees
Marketable Securities - Impairment
33. Cost model: historical - accum. depr. = impairment
Convertible Bonds
Statement of Cash Flows (Cash)
Comprehensive Income (Presentation)
Fixed Asset Valuation
34. 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.
Marketable Securities - Classification
Accounting for Stock Issued to Employees
Revenue Recognition
Funded Status of Pension Plan
35. 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
Notes to the Financial Statements
Computer and Software Development Costs
Interim Financial Reporting Requirements
36. No requirement for disclosure of key management compensation arrangements.
Pension Plan Liability
Related Party Transactions
Revenue Recognition
Determining Functional Currency
37. 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.
Development Costs (R&D)
Reporting of Remeasurements
Foreign Currency Translation
Conceptual Framework
38. Includes disclosure of significant estimates but not judgments made in preparing the financial statements.
Notes to the Financial Statements
Lease Classification
Development Costs (R&D)
Investment Property
39. 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
Impairment of Intangible Assets Other Than Goodwill
Statement of Cash Flows (Interest and Dividends)
Indirect Costs of Lease
Uncertain Tax Positions
40. 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.
Determining Functional Currency
Marketable Securities - Classification
Segment Reporting
Inventory Cost Flow Assumptions
41. 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 : (
Revenue Recognition
Capital (Finance) Lease Criteria
Construction Contracts
Error Correction
42. Classified as: (1) trading (2) available-for-sale (3) held-to-maturity
Marketable Securities - Classification
Inventory Valuation
Notes to the Financial Statements
Accounting for Adjustments in Tax Rates
43. No classification
Computer and Software Development Costs
Gains and Losses on Pensions
Investment Property
Fixed Asset Impairment
44. 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.
Marketable Securities - Available-For-Sale
Change in Accounting Entity
Variable Interest Entity
Bond Discount/Premium Amortization
45. 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.
Convertible Bonds
Prior Service Cost
Diluted EPS
Variable Interest Entity
46. Segment profit or loss - assets.
Segment Reporting
Computer and Software Development Costs
Marketable Securities - Impairment
Sale-Leaseback Transactions
47. Bank overdrafts are excluded from cash and classified as financing cash flows.
Comprehensive Income (Presentation)
Statement of Cash Flows (Cash)
Treasury Stock
Marketable Securities - Available-For-Sale
48. 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
Goodwill Impairment
Reporting of Deferred Taxes
Comprehensive Income (Revaluation)
Marketable Securities - Available-For-Sale
49. 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
Extraordinary Items
Accounting for Stock Issued to Employees
Foreign Currency Translation
Financial Instruments (Fair Value)
50. No separate recognition is given to the conversion feature when convertible bonds are issued. Bonds are recorded in same manner as non-convertible bonds.
Convertible Bonds
Financial Instruments (Initial Recognition)
Comprehensive Income (Revaluation)
Fixed Asset Impairment