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. 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.






2. 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.






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






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






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






6. 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.






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






8. Segment profit or loss - assets.






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






10. 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.






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






12. Revaluation is not permitted.






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






14. All gains and losses included in OCI






15. 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.






16. 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.






17. 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






18. 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.






19. 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 : (






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






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.






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






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






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






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






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






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






28. Enacted tax rate only.






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






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






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






32. No classification






33. 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.






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






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






36. 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






37. 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






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






39. 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.






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






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






42. No impracticality exception for error corrections.






43. Enacted tax rate only.






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






45. 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).






46. Lower of cost or market.






47. 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.






48. Cost method or legal (par) method.






49. 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.






50. 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.







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