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


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






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






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. Enacted tax rate only.






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






7. No requirement for explicitly stating following US GAAP.






8. No impracticality exception for error corrections.






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






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






12. Slight variation from year-end reporting.






13. 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.






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






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






16. No classification






17. 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.






18. Enacted tax rate only.






19. 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






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






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






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






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






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






25. 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.






26. All gains and losses included in OCI






27. Revaluation is not permitted.






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






29. 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.






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






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






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






33. 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.






34. 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).






35. 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






36. Recorded as an asset and amortized using the straight-line method.






37. 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 : (






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






39. 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.






40. Percentage of completion and completed contract method allowed.






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






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






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






44. 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






45. 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.






46. Segment profit or loss - assets.






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






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






49. 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.






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